Rising Unemployment To Keep Interest Rates Steady?

By John S. McClenahen Chances are now greater that the Federal Open Market Committee will not increase the federal funds rate, now at 1.75%, when it meets on May 7. The Fed tends not to raise interest rates when unemployment is also increasing, and U.S. Labor Department figures show the jobless rate rising a bit more than expected to 5.7% in March. Economists generally had anticipated the unemployment rate would advance to 5.6%. In February of this year the unemployment rate was 5.5%, and in January, 5.6%. There were 8.11 million persons unemployed in the U.S. in March, compared with 7.89 million in February and 7.92 million in January. Total U.S. employment decreased by 425,000 in March to 133.9 million -- although non-farm employment grew by 58,000 to 131.3 million. Manufacturing's job losses continued in March, but at 38,000 were much smaller than in the recent past. From January 2001 to January 2002, job losses in U.S. factories averaged 111,000 a month, data from the Labor Department show. Producers of electronic equipment shed 10,000 more jobs in March, and industrial machinery makers cut payrolls by 7,000. The next set of U.S. unemployment data is slated to be released on May 3, four days before the Fed meets.

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