Employment rose by 216,000 in December, according to the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics (BLS), exceeding expectations to close out 2023 on solid footing.
December's job growth was seen across several industries, including government, health care, social assistance and construction jobs. The unemployment rate was unchanged from the previous month at 3.7%, and the number of unemployed people in the country stayed at roughly 6.3 million. The unemployment rate has ranged from 3.4% to 3.9% since March 2022, according to the BLS. Average hourly earnings for private employees rose by 4.1% in the last year and increased by 0.4% from the previous month.
The strong report could delay the Federal Reserve's timeline for reversing interest rate hikes this year. During its December meeting, the central bank announced a third interest rate pause, leaving the federal funds rate at a 22-year high of 5.25% to 5.5%. However, Fed officials hinted that they could begin rate cuts this year, with interest rates expected to drop to 4.6%, according to updated economic forecasts in the central bank's Summary of Economic Projections (SEP).
"Job creation remains solid, but persistently strong wage growth adds a wrinkle for policymakers that could push back against a near-term reversal in rate policy," Jim Baird, Plante Moran Financial Advisors' chief investment officer, said in a statement. "For the time being, it appears that the Fed will be content with a 'steady as she goes' mindset."
If you are looking to reduce your expenses amid today's economy, you could consider using a personal loan to pay down debt at a lower interest rate, saving you money on monthly payments. Visit Credible to find your personalized rate without affecting your credit score.
BUY A HOME IN THESE STATES TO GET STUDENT LOAN DEBT RELIEF
With home prices still rising, how low mortgage rates dip this year will be an essential determinant of affordability and overall activity in the housing market.
The average 30-year fixed-rate mortgage is below 7% but nowhere near the pandemic low of sub-4%. Economists have predicted that mortgage rates will continue to drop if the Fed dials back interest rates in 2024. The expectation is that rates could drop as low as 6% by the end of this year.
"We expect that the economy will slow down in 2024, and this will likely lead to increases in the unemployment rate," the Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni said in a statement. "In terms of implications for the housing market, these data are likely to keep interest rates from falling further at this point, but we expect mortgage rates to drift down over the year as the economy slows."
Homebuyers can find the best mortgage rate by shopping around and comparing options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
MANY AMERICANS PREPARING FOR A RECESSION DESPITE SIGNS THAT SAY OTHERWISE: SURVEY
Despite high home prices and elevated mortgage rates, 13% of Americans are still planning to buy a new home in 2024, according to a recent survey by IPX1031. Here are some steps you can take to make the dream of homeownership a reality this year:
Buyers can save additional money on home financing by understanding and improving their credit profile. A Zillow analysis showed that borrowers with an "excellent" credit score — between 760 and 850 — could be saving up to $103,626 in mortgage interest payments over the life of a 30-year fixed-rate loan, based on a typical home priced at $354,165.
A realistic goal for the type of home you can afford can help set you up for success. That figure should include all-in monthly costs instead of looking at list prices.
Zillow recommended that buyers start with a mortgage calculator and affordability tools to understand what goes into a mortgage payment and what they can realistically afford every month.
If you're ready to shop around for a mortgage loan, you can use the Credible marketplace to help you quickly compare interest rates from multiple mortgage lenders and get prequalified in minutes.
COLLEGE TUITION PAYMENT PLANS MAY PUT STUDENT AT RISK: CFPB
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