The Federal Reserve hiked interest rates last Wednesday after determining the U.S. economy and labor market healthy enough to handle the increase. This puts the longest lasting stimulus program to rest after almost seven years, and expresses the “confidence” Federal officials have in current economic recovery.
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The new rate is up about .25 percent from nearly zero after the Federal Reserve’s observations on the economy. In labor markets, unemployment has fallen below recession highs which are down to about five percent from 2009’s 10 percent peak, reports The Washington Post, Dec. 18.
Household spending has increased across the nation. In the Federal Reserve’s eyes, the U.S. economy is recovered enough from the Great Recession to warrant less assistance.
The Federal Reserve admits that they do not know how the rate increase will affect businesses and individuals in regards to mortgage rates, consumer loans and credit.
The statistics used in the Federal Reserve’s decision look really good at the surface level. However, while unemployment rates may be down, there are still people who are working part time and seeking full time work, those who have been unemployed since the recession and those who are making below a livable wage.
Despite jobs being added to the market and the employment rate increasing, wages have stagnated. As a result, low-wage earners haven’t felt the effects of economic recovery. Minorities, single-parent families and youth entering the workforce struggle the most.
Economic security and opportunities to build a solid financial foundation seem just out of reach for those who are struggling to make ends meet. There is still a long way to go towards full recovery.
*originally published at the now defunct Examiner.com
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