Consumer confidence is spiking as U.S. markets and the Federal Reserve await the August jobs data due out on Friday. The biggest question many have is how the Fed will react to the numbers—more specifically if the data is positive.
“If the jobs number is strong, and I anticipate it will be fine, they’re [the Fed] going to find themselves in a tough spot if they decide not to react,” Charles Plosser, former president of the Federal Reserve Bank of Philadelphia.
Some say the central bank should not raise rates, regardless of the August jobs data.
“I think the argument for not raising rates is uncertain,” Plosser said. “Two statistics that are troubling: One has been weak business investment. That’s not entirely surprising given we’re about to head into an election for which the predication is to what fiscal policy—how businesses will be treated—by either of our two candidates.”
The former Philadelphia Fed President added there’s good reason to believe there’s uncertainty in the business community about investing while productivity data have also been a concern.
Plosser also weighed in on the current state of the U.S. economy, saying the consumer “looks great.”
“Wage growth, personal income growth has been pretty healthy,” he said. “Obviously people would prefer to see wage growth higher, there’s no question about that. But I think it’s been pretty steady and pretty good. I think with employment continuing to grow that you’re going to see some continued wage growth, not at a spectacular rate, but still a pretty steady rate between 2-3%.”