What's going on?
The US economy is powering on: there were 201,000 jobs added in August, wages are on the up, and unemployment is still at an all time low. America… yeah!
What does this mean?
If you’re in the US, the chances of getting a job are looking mighty fine (tweet this). The jobs numbers (released on Friday) were better than expected, but what’s cooler than cool is that people are getting paid more, too – annualized wages rose nearly 3% in August, the highest rise in nearly a decade.
With more jobs added to the economy, the unemployment rate has stayed at a record low (about 4%), so more people are earning (and earning more money), buying stuff and therefore growing the economy.
Why should I care?
For markets: The US is still the place to be for investors.
The strong economy is also driving a strong dollar because it’s a relatively safer bet (with political and economic risks in places like Europe, a thriving US economy looks even better to investors) and it pays more (higher interest rates means you get more money for holding dollars in US banks). The value of several emerging markets’ currencies move in lockstep with the value of the dollar (a.k.a. they’re pegged), so a strong dollar can be bad for them as their exports become more expensive.
The bigger picture: Despite concerns, the US is still hot right now.
The US economy is one of the most important on the planet (it became the first $20 trillion economy in July). So, when the US is doing well it’s usually good for most other economies, too. The higher wages are especially important because more money to spend will drive growth and inflation, meaning rate rises are still on track for next year.