Question

At 8:30 AM, Washington DC time, on Friday, February 5, 2016, the Bureau of Labor Statistics (BLS) made the following announcement:

THE EMPLOYMENT SITUATION -- January 2016

Total nonfarm payroll employment increased by 151,000 in January, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries led by retail trade, food services, and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.

 

9a) How does the BLS determine the unemployment rate for January 2016?

9b) How does the BLS determine the employment rate?

Right after the BLS announced the employment level and the unemployment rate for January 2016, a bunch of Wall Street analysts offered their opinions about what Ms. Janet Yellen, the Chairman of the Federal Reserve Bank, next steps would be. The majority of the analysts stated that Ms. Yellen will keep current interest rates as they are in March 2016 and will raise rates in the third quarter of 2016. Their opinions are based on the following:

	Unemployment Rate	Employment Increase
October 2015	5.0%	295,000
November 2015	5.0%	280,000
December 2015	5.0%	262,000
January 2016	4.9%	151,000

However, other analysts believe that Ms. Yellen will not change the current level of interest rates until the end of 2016 due to the economic slowdown and uncertainties in Europe, China, and other Asian countries.

9c) Please provide your opinions on which direction Ms. Yellen should take and why?