The Chairman of the Federal reserve, Federal Reserve Chair, claims that a hike in inflation rates will occur with Donald Trump taking office soon. She claims that progress in the labor market has continued and economic activity is increasing in comparison to earlier this year. She also claims that unemployment is starting to recover and Donald Trump's policies may ruin progress. Inflation is still below 2% and has increased slightly this year. The Federal Reserve will discuss their future plans at the Federal Open Market Committee.
The stock market has been balancing out since the election of Donald Trump. Economists speculate that investors have more confidence in the market with Donald Trump in office. Experts in the futures markets are predicting that the Federal Reserve will hike the inflation rates by 100% or more.
The Federal Reserve has the goal of maximizing employment rates and keeping staple prices stable. They are aware that employment growth cannot be maintained forever but there is definitely room for short term improvements. Even though there had been overall growth in the job market, African American and Hispanic job growth is relatively stagnant. These ethnic groups also remain as the lowest household incomes in the United States.
There have been an average of 180,000 employment gains per month since the Federal Reserve had been stimulating job growth since the beginning of the year. The unemployment rate is equalized at 4.9 percent and may have been higher without their help. The unemployment rate still had not reached the expectations set by the Federal Open Market Committee. Involuntary part-time employment has also reached a historically high level.
It is expected that the inflation adjusted gross domestic product will increase by 3 percent the end of the quarter. The surge in soybean exports may have played a role in the slight GDP raise. There has been an increase in spending by consumers due to increased expendable income. There are also lower borrowing rates as well as increased household net worth values. Manufacturing has really taken a hit due to devaluation of the US dollar in recent years. The household construction industry has slowed due to that rising prices of real estate.
Yellen is not entirely dismissive of Trump's proposed plant to spend $550 million to upgrade the infrastructure and boost the defense budget. Any of these plans would have to be up to the Congress and out of his hands. She has even urged congress to pass stimulus bills like this in the past.