Friday, December 5, 2014

CNBC: Hot Job Gains Spark Talk of Earlier Fed Move

This CNBC article talks about the jobs report issued Friday which came out stronger than forecasted. It will interesting to see how the Fed reacts to this news since they want higher inflation. Raising interest rates is likely to hamper that goal. For now, this report seems to signal a stronger job market. But we can expect the skeptics will find fault with the numbers released in the report since they remain convinced the US economy is still very weak. Below are a few quotes from the article.

"November's surprisingly strong job growth and wage gains sparked talk of an earlier Fed rate hike, but that's not likely without several months of solid improvement, strategists say."
. . . . . . 

"The market has effectively accelerated its expectation for a Fed rate hike by a full quarter simply on the basis of this jobs number," said Adrian Miller, director of fixed income strategy at GMP Securities. "By September, it is expecting two rate hikes."
. . . . . . 

"The Fed has been on the lookout for wage gains, since that would be the kindling for future inflation, but it wants to see a level closer to 3 percent and consistent advances for several months before it raises rates, strategists say. Many economists had expected the rate hike would be in the third quarter, but forecasts range from March to December."
. . . . . . 

"McCarthy said the Fed is getting closer to fulfilling its employment mandate but inflation is still lacking, running below the central bank's 2 percent target."
It will be interesting to see how people like John Williams of react to this jobs report. Last year in early 2014 he predicted that the US would fall into recession and that the US dollar would take a sharp drop in 2014. He missed that and the US dollar has rallied higher instead while jobs reports were fairly strong in 2014. In this recent interview with former CNN reporter Greg Hunter, he insisted his forecast will still pan out in 2015 and that the economic statistics issued by the US Government are overstated. So will he be right or wrong in 2015? We'll follow it here and report back.

Update 12-7-14: Here the Headline responses by John Williams to the Latest Jobs Report . His service is a paid subscription service, but you can see by his headlines that the new jobs report does not change his view on things.

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