Herald Citzen
 LATEST NEWS
 Top Stories
 U.S.
  Severe Weather
  Bird Flu
 World
  Castro
  Mideast Crisis
  Iraq
 Business
 Personal Finance
 Technology
 Sports
  Sports Columns
  NASCAR
  Baseball
  College Hoops
  NBA
  NHL
  Tennis
  Golf
 Entertainment
 Health
 Science
 Politics
 Washington
 Offbeat
 Podcasts
 Blogs
 Weather
 Raw News
 NEWS SEARCH
 
 Archive Search
 SPECIAL SECTIONS
 Multimedia Gallery
 AP Video Network
 Today
 in History
 Corrections
Sep 4, 12:05 AM EDT

Why Friday's US jobs report could affect Americans' finances


AP Photo
AP Photo/Eric Gay

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
German factory orders drop in July

China's stock rescue jolts companies, reform plans

Why Friday's US jobs report could affect Americans' finances

European Central Bank ready to give eurozone more stimulus

US services firms expand rapidly, lifted by strong sales

The Latest: ECB's Draghi says inflation target must stand

IMF: China, tumbling commodity prices threaten world economy

China slowdown weighs on Australian growth in second quarter

Canada in recession; PM Harper denies it as election looms

US factory output up in August at slowest pace since May '13

Buy AP Photo Reprints
Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

WASHINGTON (AP) -- With the Federal Reserve edging into the spotlight, Friday's jobs report for August could trigger eventual changes in Americans' financial lives.

That's because a healthy job gain would provide one of the final pieces of evidence the Fed needs to start raising interest rates from record lows on Sept. 17, which many economists expect it to do. It would also send a reassuring signal that China's sharp slowdown has yet to seriously jar the U.S. economy.

The government will issue the August jobs report at 8:30 a.m. Eastern time.

Analysts have forecast that employers produced a healthy increase of 220,000 jobs, according to data provider FactSet. Such a gain would extend a hiring streak that has added an average of 243,000 jobs a month for the past 12 months. Economists have predicted that the unemployment rate dipped to 5.2 percent from 5.3 percent in July.

That rate is within the range that Fed officials have said is consistent with a healthy economy. Combined with another solid job increase, a further drop in unemployment would raise the probability that the Fed will increase rates for the first time in nine years.

Many economists have long predicted that the Fed would lift rates in September. But the turbulence in global stock markets, a U.S. inflation rate persistently below the Fed's target level and China's economic slowdown have scrambled their assumptions. Most economists say the Fed will at least want markets to stabilize before they raise rates.

Still, after three years of solid job growth that has put nearly 8 million Americans back to work, Fed officials are probably satisfied with the job market's progress.

Eric Rosengren, president of the Federal Reserve Bank of Boston, said Tuesday that the Fed's desire to see further improvement in hiring "has largely been met."

Likewise, David Joy, chief market strategist at Ameriprise, said, "I think they feel pretty good about where the job market is."

Once the Fed begins raising borrowing rates, higher rates are likely to eventually ripple through the economy. Americans could face higher costs for mortgages and other loans, though the increases could be modest and gradual.

But Joy thinks the Fed may still hold off on a rate rise at its next meeting because of China's weakening economy, which has slowed growth in countries that supply it with raw materials, such as Brazil and Australia.

A stumbling global economy and stronger dollar, which makes U.S. exports costlier overseas, could hamper growth for the next 12 months, according to Goldman Sachs. In part, that's why Joy thinks a disappointing jobs report could lead the Fed to delay a rate hike, particularly if stock prices plummeted in response.

Joseph LaVorgna, chief U.S. economist at Deutsche Bank, notes that job reports for August typically fall short of economists' expectations. The elimination of millions of summer jobs can complicate the data.

In case of a subpar August jobs report, it might be hard for the Fed to conclude that the economy was strong enough to withstand a rate hike, he said.

"The reality is that people tend to focus on the latest number, and not the trend," LaVorgna said.

A key question is how the stock market turbulence and China's troubles might affect the overall U.S. economy. The answer probably won't be clear for months. So far, the effect has been minimal.

Smaller companies and services firms, which are largely insulated from global trends, are still doing well. Service sector companies, such as restaurants, retailers, banks and construction companies are expanding at the fastest pace in nearly a decade, according to a survey by the Institute for Supply Management.

The number of Americans seeking unemployment remains very low by historical standards - evidence that companies are still confident enough about customer demand to maintain their staff levels. A solid jobs report Friday would reinforce that view.

Brian Petranick, chief executive of Right at Home, a provider of in-home care to the elderly and disabled, says his company is proceeding with expansion plans both in the United States and China.

The company plans to add 15 franchises by the end of the year to its current 410. Those new franchises will require 1,500 new employees, on top of the company's current 22,000. Right at Home expects the number of its outlets in China to jump 50 percent over the next year.

Petranick foresees solid growth for his company in China: In 10 years, its population over 65 will likely outnumber the entire U.S. population, he said.

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.