Janet Yellen, the Chair of the Board of Directors of the Federal Reserve, believes that the appearance of a recovering American economy makes raising interest rates a priority. Yellen said while speaking to the Committee on Financial Services on July 15th, 2015, “Since my appearance before this Committee in February, the economy has made further progress toward the Federal Reserve’s objective of maximum employment, while inflation has continued to run below the level that the Federal Open Market Committee (FOMC) judges to be most consistent over the longer run with the Federal Reserve’s statutory mandate to promote maximum employment and price stability” (da Rosa, “Yellen: Recovering…”).

She insists that because the unemployment rate in the U.S. is dropping, the Federal Reserve should allow interest rates to rise. This will be catastrophic, because the unemployment rate of 5.3% in June 2015 does not accurately represent unemployment in the U.S. For one, people who have given up looking for a job, the underemployed, and those who have gone back to school are not calculated into the unemployment rate. If these Americans were calculated into the unemployment rate, then the rate would double.

In June 2015 for example, the unemployment rate was calculated by taking the 8.299 million unemployed over the 157.037 million in the labor force. The result was 5.3%, but when the 1.914 million discouraged job seekers and the 6.505 million underemployed were added to both the labor force and the unemployed, then the rate skyrocketed to 10.5% (Amadeo, “What Is the Real Unemployment Rate?”).

How can anyone, much less the Chairwoman of the Federal Reserve, talk about raising interest rates with the unemployment rate at 10.5%, a far cry from the advertised 5.3%? The American people deserve to know that their interest rates are rising and property values are plummeting simply because the Board of Director’s Chairwoman will not acknowledge the true state of the economy.

Yellen later tells the Committee of Financial Services, “I want to emphasize that the course of the economy and inflation remains highly uncertain. We will be watching carefully to see if there is continued improvement in labor market conditions, and we will need to be reasonably confident that inflation will move back to 2% in the next few years” (da Rosa, “Yellen: Recovering…”). The only uncertainty here is the dysmorphic data used to prove a need where there is none. Let’s talk about the actual numbers.

There are 16.718 million people in the U.S. that are unemployed or underemployed as of June 2015 (Amadeo, “What Is the Real Unemployment Rate?”). The reason that the advertised unemployment rate is falling is not because people are finding jobs. Instead, disheartened Americans are giving up the futile search. They are no longer accounted for. Therefore, raising their interest rates adds even more strain to the crippled economy. The real estate market in particular suffers under high interest rates, causing property values to be slashed when buyers haggle to account for their higher interest rate. After all, who wants to invest in real estate when the interest rate does not allow Americans to buy?

These are the real numbers, Janet Yellen. When were you going to tell America that you did not care about a 10.5% unemployment rate? Yes, inflation is at 2%, but we can deal with that when more Americans are back to work. In 2006 when the unemployment rate was at a low 4.6% (Databases, Tables & Calculators), the inflation rate was up to 4%, and this happened because of rising energy prices (US Inflation Rate by Year). The real danger of inflation at that time was raising the price of living too high for the average American to afford. With inflation at 2% there is no immediate danger to the American people as long as that number does not climb to 4 and 5%. Yellen is pointing to the shrinking unemployment rate as proof of a rising inflation rate; however, as unemployment rates are not actually falling, one can see that Yellen has no reason to be worried about inflation.

In spite of the truth about the economy and unemployment, mortgage rates will continue to rise so get ready for it.  The Chairwoman’s rhetoric is only making matters worse and when the FMOC moves to raise the federal discount rate do not be surprise by the fallout and negative impact to the economy and mortgage interest rates.  Not even Yellen knows how much interest rates will climb or need to climb to slow down inflation, but the American people will be there to deal with the aftermath of her obsession about inflation.


The best scenario for us now is that there is only a slight rise in mortgage interest rates; although, for some potential homebuyers even a .25 point increase in the rate may disqualify them for a mortgage loan. Because of this, buyers need to purchase a home now before they can no longer afford the interest on the mortgage. Work with a great agent and find the listing you want and act now! Sellers should also be concerned about mortgage rates increasing. Negotiations and settling on a home become much more challenging when interest rates climb.  Buyers will submit lower offers to combat the interest rate.  So whether you are buying or selling, stop procrastinating before you pay for it with higher interest. Go to www.thepowerisnow.com and join the buyers and seller s club for free and receive free support, consultation and information from me and my team. You have the power to change your life now because The Power Is Now.


Eric Lawrence Frazier MBA

President & CEO




Rosa da, J. (2015, July 16). Yellen: Recovering economy to lead to rate hikes. Retrieved July 20, 2015.

Amadeo, K. (n.d.). What Is the Real Unemployment Rate? Formula, Examples. Retrieved July 20, 2015.

US Inflation Rate by Year. (2015, May 1). Retrieved July 20, 2015.

Databases, Tables & Calculators by Subject. (n.d.). Retrieved July 20, 2015, from https://data.bls.gov/timeseries/LNS14000000

Kollewe, J. (2008, October 14). Inflation soars to 5.2%. Retrieved July 20, 2015.