Each month, we get the monthly non-farm payroll report from the Labor Department. No other piece of news is more closely watched by the markets and the Federal Reserve than this employment data. The report for January showed that the unemployment rate climbed to a four-month high and wage growth was a little slower than expected. Bad news on the economy is good news for mortgage rates.
In short, inflation is bad for everyone. If the economy is growing too fast and prices are rising rapidly, your money will buy you less goods and services going forward. Slow and steady growth is what the Federal Reserve wants and you should as well. The monthly employment report is a good leading indicator on the overall health of the economy. If employers are adding workers, having to pay more per hour to keep workers, and those workers are putting in longer work weeks, then there is the potential for inflation as employers look to pass those wage costs on to the consumer in the form of higher prices.
Federal Reserve Chairman Ben Bernanke is closely watching the labor market to see if there are any signs of inflation. The Fed met on Wednesday and decided to keep interest rates steady. The mission of the Federal reserve is to provide the nation with a safe, stable, and flexible financial system. Keeping inflation under control is one of the primary objectives.
There is a ton of data released each month which helps the the Fed decide what to do with interest rates. When it is clear that the economy is growing too quickly and inflation is picking up, the Federal Reserve will increase interest rates to try and slow things down. In short, we all want a Fed that is tough on inflation. So far, most agree that new Fed Chairman Bernanke is doing a very good job fighting the bid bad inflation monster