Wall Street Journal (03/17/15) Josh Zumbrun
Although U.S. Federal Reserve chairman Janet Yellen cited improvements in the labor market and resurgent consumers as she laid the groundwork for an increase in interest rates later this year, private economists have downgraded forecasts for first-quarter growth in recent days as economic data show sluggishness in industrial production, retail sales, and housing starts. These latest economic reports are important because central bank policymakers do not want to hike interest rates until they are sure the economy is sound.
However, the continued strength of the job market has been most reassuring to policymakers, with the unemployment rate falling to a nearly seven-year low of 5.5% in February, and the 3.3 million jobs added during the year-to-year period marking the highest number in about 15 years. “Even in years when the economy is booming you’ll always find pockets of weakness,” says Joseph LaVorgna, chief U.S. economist for Deutsche Bank. “But the labor market seems to be the key driver in all of this and the labor market looks great.”