Will the poor jobs numbers sway the Fed?
The significant drop in job creation has many economists and financial analysts speculating about what the Federal Reserve will do, if anything, in regard to the tapering of the bond-buying program. Only 74,000 jobs were added in December 2013 – far below the 200,000 that were expected – making it the weakest job-growth month in the past three years.
The Fed said that it would begin to taper its bond purchases later this month, citing a strong economy, but weak jobs numbers put that decision into question. Daniel Greenhaus, chief global strategist at BTIG, told CNBC that he expects the Fed to continue with its plan because of the strength of other economic factors.
"The economy, based on any number of other indicators, has been picking up steam of late which makes today's number […] curious. We aren't sure how the Fed should react to this number but we think another reduction at the January [Federal Open Market Committee] meeting is probably unlikely. Investors though have already cast their vote. Bad news is bad news."
Greenhaus' opinion reflects those from other analysts who think that the December jobs numbers are an anomaly. A bad jobs report usually reflects a bad overall economy, but that does not seem to be the case, based on stock market and retail sales growth.
One major dissenting voice comes from Barclays. In a note, the bank's economists wrote that they expected the Fed to go forward with the taper, but reduce the pace.
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