Feb 07 - Stocks took the weak jobs report in stride focusing on bright spots within the report ahead of Janet Yellen’s first testimony as Fed chair. Bobbi Rebell reports.
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Markets gave the January jobs report the benefit of the doubt- moving higher as investors focused on added growth in areas like construction and manufacturing- indications the weather may not be hurting the economy as much as feared.
Council of Economic Advisors Chairman Jason Furman:
SOUNDBITE: JASON FURMAN, CHAIRMAN, COUNCIL OF ECONOMIC ADVISORS (ENGLISH) SAYING:
"I don't think weather was a big factor in January. The reference week was actually slightly warmer than average and weather sensitive industries like construction showed strong growth."
While payrolls rose a weaker-than-expectd 113,000. The rate of unemployment came in at 6.6 percent- just shy of the Fed's 6.5 percent target to raise rates.
That pledge came more than a year ago- and they thought it would stay there until at least mid 2015. Fed Chair Janet Yellen now has to find a way to reassure investors rates will stay low- which presents a big problem, says Reuters columnist James Saft.
SOUNDBITE: JAMES SAFT, REUTERS COLUMNIST (ENGLISH) SAYING:
"Having embarked on tapering in December and carried through in January, they are just that little bit trapped. So the focus now moves to Yellen's Humphrey-Hawkins testimony next Tuesday before Congress. For her then to give strong signs of being willing to reverse course now would be to give the appearance of panic and indecision. It would also probably be a bit of an overreaction and might even be more than she could deliver with the strong majority within the FOMC."
And so Yellen will really have no choice but to stay the course when it comes to tapering says Decision Economics Cary Leahey:
SOUNDBITE: CARY LEAHEY, ECONOMIST, DECISION ECONOMICS (ENGLISH) SAYING:
"The decision to taper had as much a political element as an economic element to it, and I think if you take that as a lower bar, I think the current pace of private sector job creation of about 140,000 is just enough to keep tapering going on at its current pace. So no, this is not a game changer for Janet Yellen or the Fed."
Many believe the Fed will try to avoid tying policy to specific targets going forward. In fact, Fed officials are talking about reformulating their forward guidance- a move that could come as soon as a Fed policy setting meeting on March 18th and 19th.
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