December NFP = 74,000

The government released the jobs report for December, and the economy created only 74,000 net new jobs last month. The consensus was for 200,000 jobs. That’s the smallest gain in more than three years.

The odd part is that because of a smaller workforce, the unemployment rate dropped down to 6.7%. That’s the lowest in more than four years. The labor force participation rate fell to 62.8% for December. It hasn’t been this low since 1978.

I think this jobs report will cause the Fed to change its unemployment rate threshold for raising short-term interest rates. Right now, that threshold is 6.5%, and we’ll probably pass below it soon. I think the Fed will lower their threshold to 6% sometime this year.

Posted by Eddy Elfenbein on January 10th, 2014 at 10:34 am

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