As unemployment falls, interest rate hikes grow nearer

Editor’s note: Business content from The New York Times will now be included with your subscription to Finance & Commerce. Not a subscriber? Start your subscription here. 


Federal Reserve officials have signaled that they are poised to raise interest rates this year as they try to put a lid on high inflation, and new data showing that the unemployment rate declined is likely to keep them on track to pull back their support for the economy.

The jobless rate fell to 3.9% in December, based on data collected during a period that largely predated the worst of the omicron-driven virus surge in the United States. Unemployment peaked at 14.8% in April 2020 and had hovered around 3.5% for months before the onset of the pandemic. Fed officials expect unemployment to return to pre-pandemic levels by the end of the year, their economic projections released in December showed.

The rapid return to near-normal jobless rates has caused many central bankers to determine that the United States is nearing what they estimate to be “full employment,” even though millions of former employees have yet to return to the job market.

That is partly because signs abound that jobs are plentiful, but workers are hard to find: Wages are rising swiftly, job openings are at elevated levels and the share of people quitting their jobs just touched a record. Employers complain about struggling to hire, and a dearth of workers has caused many businesses to curtail hours or…

Read more…