David Zervos Doesn't Know How The Haters Can Look At Themselves In The Mirror Anymore
The employment data last week was certainly strong enough for the Fed to move ahead with a taper at the upcoming FOMC meeting. A 7% unemployment rate with a RISING participation rate and a 200K handle on payrolls is about as good as we could have wished for. And the most beautiful part of the data release was that it was yet another one of those "OMG QE works" moments for the hater community. At this point I wonder how the haters can still look at themselves in the mirror. In any case, the inflation side of the equation has certainly not been as exuberant. Those on the Committee who have bought into this "secular stagnation" concept, and thus believe there exists a large amount of potential growth which must be uncorked as we head into a sustainable recovery, will still not be eager to withdraw stimulus. In addition, if one starts to dig deeper into the employment data, it's very easy to find reasons to be dubious of the purported strength of the numbers. For example, the employment-to-population ratio remains depressed; the civilian labor force has actually contracted in the past year; and the new job adds are not coming in "high-quality" industries. The good news associated with QE's working does have some blemishes, and there is a very reasonable argument to be made that our 7% unemployment number is a bit worse than it appears.