The Jobs Report just came out and it was very bad.
The 74K new jobs was much worse than the 200K that was expected.
But at the same time, there was a HUGE drop in the unemployment rate, from 7.0% to 6.7%.
There was also a big drop in the Labour Force Participation Rate, which helps the unemployment rate to fall.
So now Janet Yellen has a slightly tricky position. This number does not suggest an economy that’s hitting “escape velocity.” But on the other hand, we’re getting closer to unemployment levels where the Fed might be inclined to tighten. But on the third hand, we don’t know how “clean” that unemployment number is because fo the ongoing decline in Labour Force Participation Rate.
So things just got a bit trickier for Janet Yellen, who now doesn’t have a smooth path out of the current plan.