Things could hardly look better for the American worker than they do right now...
In Friday's jobs report from the U.S. Bureau of Labor Statistics., we found out...
- The American economy added 271,000 new jobs in October – blowing past economist expectations of 182,000 new jobs...
- The unemployment rate fell to 5%, its lowest level since April 2008...
- And average hourly earnings have climbed 2.5% over the last year. That's the biggest jump since 2009...
All of this is great news for folks on Main Street.
And some of the best news in the jobs report was that hourly wages for production and non-supervisory workers – about 80% of all American private employees – grew more than the rate for all workers. Managers' hourly wages grew about 0.32% from the previous month, while regular workers' pay grew 0.43% for the month.
This means that the average Joe did better than his boss, for the first time in a while...
Before people make decisions about spending money, most of us consider how much money is flowing in first... More jobs, more income, more spending. That's a good sign for economic growth and the average American at large.
But Wall Street is scared...
It's afraid of the "easy-money tap" getting turned off... or even turned down.
Minutes from the Federal Reserve's late-October meeting... and Wednesday's comments from Fed chair Janet Yellen that an interest rate hike was a "live possibility"... make it seem likely that the Federal Reserve will increase interest rates at its December 15-16 policy meeting.
And noted bond-fund manager Bill Gross declared there is now a "100% chance" that the Fed will raise rates in December... "They are ready to go," said Gross.
We still have another jobs report before the Fed policy meeting. So nothing is certain.
Futures markets now indicate there's a 70% chance that the Fed will raise rates by December, according to Bloomberg News. The day before the most recent jobs report came out, those odds were just 56%.
So the data do support a rate hike coming eventually... If not in December, then likely in the spring. But unlike Wall Street, we aren't afraid of higher rates.
Stansberry Research Senior Analyst Matt Weinschenk had this to say in his surprisingly controversial Retirement Millionaire Daily interview:
There's not going be any big upheaval in the stock market when rates rise. For the average person who's got a minimal level of knowledge in finance, it's not something you need to worry about.
When rates rise you'll earn more on your CDs and your savings accounts, things like that. But if rates are rising, that means the Fed has judged the economy to be doing well, which it is right now.
When that's the case, corporate profits are rising and sales are rising. That sort of rising economy raises stocks and raises a lot of investments that overpower anything that the Fed's doing with interest rates.
That's exactly what's happening right now. The economy is improving... Wages are starting to grow... And consumers and businesses are more confident than ever.
(For the record, Matt puts the odds of the Fed raising rates in December at only 40% or so.)
Everything isn't yet "rosy," but the average American is certainly doing better than he was during the scariest parts of the recession.
If the Fed raises rates, enjoy the higher interest paid on your savings accounts and CDs... And above all, don't panic just because Wall Street banks and hedge funds tell you to.