Jobs Report: How It Will Affect You

iStock/Thinkstock(NEW YORK) — Whether or not you believe the labor market is improving, the folks at the Federal Reserve in Washington, D.C. are paying keen attention to make decisions that will affect your wallet.

Depending on the strength of the jobs market and economy, our nation’s central bank makes decisions that affect the interest rate at your bank, mortgage rates and how the stock market may move your 401(k).

Federal Reserve chairwoman Janet Yellen, like her predecessor Ben Bernanke, is particularly focused on the labor market and what it indicates about the U.S. economy.

There were 214,000 jobs added in October, slightly less than expected, while the unemployment rate edged down to 5.8 percent, the Labor Department said in its monthly jobs report released on Friday.

Here’s how Friday’s numbers could affect your wallet in the coming weeks and months:

1. Interest rates may increase

The Federal Reserve sets the federal funds rate, simply described as the rate at which banks lend to each other, which sets the tone for the rates they offer consumers.

The Federal Reserve is set to hike the federal funds rate, now at a historically low 0.09 percent, next summer, said Stuart G. Hoffman, chief economist of The PNC Financial Services Group.

“Nothing in this report would cause the Fed to speed it up nor slow it down,” he said.

The interest rates that consumers are offered at banks these days are so low, anything higher might be a welcome move.

Lindsey Piegza, chief economist and managing director of Sterne Agee, said the Federal Reserve could wait for economic conditions to improve, including decreasing the number of discouraged workers. She believes the Fed could maintain its “accommodative” monetary policy for longer than expected; that is, it’s program that places downward pressure on longer-term interest rates that began around 2008 to help flailing economic conditions.

2. Mortgage rates could go up

While Hoffman believes mortgages rates may barely edge down in the future, if interest rates increase, the rate at which people borrow to buy a house tends to increase too.

However, mortgage rates are already relatively low at close to 4 percent. But rates moved higher for the second week in a row, Freddie Mac reported Thursday. The 30-year fixed-rate mortgage averaged 4.02 percent for the week ending Nov. 6, up from last week when it was 3.98 percent. Last year at this time, the 30-year fixed-rate averaged 4.16 percent.

Meanwhile the 15-year fixed-rate mortgage averaged 3.21 percent this week, up from last week when it averaged 3.13 percent. Last year, the 15-year fixed-rate averaged 3.27 percent.

3. Holiday season outlook

Though there were slow wage gains in Friday’s jobs report, American workers’ income growth was reported as “very solid” in October, Hoffman said. Meanwhile, there’s low or zero inflation and gas prices continue to fall.

“This sets up a very good holiday sales season,” Hoffman said. “Higher consumer confidence, stock prices and house prices reinforce our positive outlook for holiday retail sales.”

Hoffman forecasts that holiday sales will rise by a solid 4 to 4.5 percent this season (November and December) from a year ago with a “healthy” 2.5 to 3 percent rise in real consumer spending.

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