Dollars and Jens
Friday, January 04, 2008
employment situations

By which I mean, er, I'm somewhat disappointed with these numbers.

The establishment survey, to be honest, isn't that bad — payrolls expanded (if barely), wages continued on their 5% annual pace. The household result, on the other hand, is a disaster. They're intended to measure slightly different things, but this discrepancy is still a bit extreme, and one tends to imagine the actual health of the labor market to lie somewhere between the numbers we see here. If retail sales and other numbers later this month are at all tepid, the fed has a wide opening to cut the target 25 or even 50 bp.

Incidentally, the January fed funds future is still several bp away from the current target, and moved more so today. It's hard to say whether this is an actual bet on a pre-meeting change in the target or simply a willingness on the part of the open market desk to let rates fall a bit short of that target; the rate over Monday (and Tuesday) night was just 3.01%, though year-end is a bit strange, but that per se shouldn't have affected a change today in the value of the future.

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