Jan. 10 - The weak jobs report has the potential change the Fed's tapering plans- as well as their unemployment targets. Bobbi Rebell reports.
Let the second guessing begin. Far fewer jobs were created in December than pretty much anyone expected- including the U.S. Federal Reserve. And that throws into question their decision to start tapering their extreme bond buying program. Decision Economics' Cary Leahey: SOUNDBITE: CARY LEAHEY, ECONOMIST, DECISION ECONOMICS (ENGLISH) SAYING: "I think it would have been different. I think they would have waited until the March press conference even though Bernanke in the minutes hinted that it wasn't a close call it might have been a closer call than they want to admit in public or in the minutes so I would think that if you had had this number a month ago they would have said lets punt until March." He wouldn't be surprised if they maintain their tapering but keep it at $75 billion per month - and just keep watching the data. So why was the jobs number so much weaker than expected? Steve Blitz of ITG Investment Research: SOUNDBITE: STEVE BLITZ, CHIEF ECONOMIST, ITG INVESTMENT RESEARCH (ENGLISH) SAYING: "You've got these swings in seasonal hiring, like couriers for example, which was up sharply in November then down in December, and that really reflects a bad seasonal factoring by the BLS, for the way in which people shop today mainly through Amazon and things like that and that type of online and there is also a weather factor as well. A lot of workers did not report to work because of bad weather." The other jawdropper- the unemployment rate fell to 6.7 percent- getting ever closer to the Fed's 6.5 percent target. SOUNDBITE: CARY LEAHEY, ECONOMIST, DECISION ECONOMICS (ENGLISH) SAYING: "Oh that is a problem. The Fed started backing away from that last fall where the Chairman Bernanke said 'well we just don't look at one variable' even though that's the one variable they picked. They are realizing the mistake they made where they tied their horse to one barn so to speak." The reason that number was so low is not necessarily good admits The Council of Economic Advisors Jason Furman: SOUNDBITE: JASON FURMAN, CHAIRMAN, COUNCIL OF ECONOMIC ADVISORS (ENGLISH) SAYING: "Whenever the unemployment rate is elevated that is going to manifest itself as some people who temporarily give up looking for jobs or delay their entry into the labor force." In fact the labor participation rate fell to a 36 year low. The stock market took the news in stride, opening higher before falling back. Zephyr Management's Jim Awad: SOUNDBITE: JIM AWAD, MANAGING DIRECTOR, ZEPHYR MANAGEMENT (ENGLISH) SAYING: "I think the markets would have preferred a higher number in terms of employment growth but the flipside of it is the fact that it's lower gives the credit markets a little bit of room and the credit markets don't constrain the equity markets." Analysts also caution that this is just one data point- and the Fed will likely consider it in context with other recent reports on the job market which have been stronger.