Let’s get real about interest rates

Yes, the Federal Reserve on Wednesday raised the key federal funds rate (by 0.25 percent).

Yes, it’s the second rate hike since last December.

However, the federal funds rate still is below 1 percent after hovering near zero since late 2008. And while higher rates will affect consumer loans such as student loans, car loans and home mortgages, the Fed repeatedly has said that future increases will be “gradual.”

The Fed “sees the potential for a modest uptick in prices and activity over the next 12-24 months,” Lindsey Piegza, chief economist at Stifel Fixed Income, said in a statement. “But in the long-run, the Fed’s forecast for a moderate (read: blah) trajectory of the economy remains.”

Much of what I wrote in this article for The Dallas Morning News a year ago on how higher rates might affect consumers still holds true today.

Interest rates generally are still low.

Look at the 30-year mortgage rate. It peaked at 18.5 percent in October 1981. Today, it’s 4.16 percent vs. just under 4 percent a year ago.


States see steady employment

New government data shows what the Federal Reserve leaders recognized earlier this week: steady employment trends in most states through November.

In a long-expected move, the Fed’s policy setting committee on Wednesday raised interest rates by 0.25 percent to 0.75 percent. Among its reasons were a labor market that has continued to strengthen and economic activity that’s expanded at a moderate pace since the middle of the year.

California leads national employment gains with 377,200 new jobs for the 12 months through November, according to data released today from the U.S. Bureau of Labor Statistics. Overall, 31 states plus Washington, D.C., added jobs over the last year, Wyoming lost jobs and employment was about the same in 18 states.

You can see state-by-state data in an interactive graphic I made with Tableau Public. Just scroll over each circle to see the employment data.

For the month of November, employment was virtually unchanged n 39 states, nine states added jobs and two states lost jobs. Florida added most jobs (+29,600) and Virginia lost the most jobs (-13,600). California added 13,600 jobs last month.

The nation added 178,000 jobs in November, with most gains in professional and business services and health care, and 225,300 over the last 12 months.