January jobs report to be celebrated – with caution and caveats
When the employment figures were announced by the Bureau of Labor Statistics (BLS) on Friday, the Obama administration were upbeat as the news provided a boost to the President’s reelection chances. The reaction of Republicans was mutedly upbeat, well, as the news provided a boost to the President’s reelection chances. And economists? Caution and caveats laced their response.
Barron’s columnist Gene Epstein noted that the 243,000 increase occurred in January, which means they are seasonally adjusted figures, and over the past 20 years, “January has never witnessed a decline of less than two million payroll jobs even in boom times. Most recently, in the recession year 2009, the plunge came to a record 3.7 million. All of which is before seasonal adjustment.”
The hesitancy to fully embrace the recent employment data as a sign of a sustained recovery was reflected in testimony offered by Federal Reserve Chairman Ben Bernanke on February 2. Speaking before a congressional committee, Bernanke characterized his outlook as “uncertain” and “close monitoring of economic developments will remain necessary.”
“In an environment of well-anchorted inflation expectations, more-stable commodity prices, and substantial slack in labor and product markets, we expect inflation to remain subdued,” he added.
Read Bernanke’s full testimony and the Federal Open Market Committee’s January 25 statement.
Bernanke repeated the Federal Open Market Committee’s Jan. 25 statement that the outlook for the economy would likely warrant near-zero interest rates through at least late 2014.