Was the Fed's 'no taper' decision based on phony job numbers? James Bullard, the president of the Federal Reserve Bank of St. Louis, said the Fed was prepared to start cutting its monthly bond purchases up until weaker data came in earlier this month. In all likelihood, this was a reference to the monthly jobs report, which showed disappointing growth. However, a paper presented by economist Jonathan Wright suggests the Fed may have been misled by meaningless data. The evidence suggests that employment growth was just as anaemic in July (BLS reported 104,000 new jobs) as it was in February (332,000 new jobs). The discrepancy arises due to seasonal differences which don't affect estimates of the total number of Americans working (~136 million), nor do they change the fact that employment has been growing steadily. This serves as a reminder to treat monthly changes in data with caution. (VIEW LINK)
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Hard to tell what the Fed is looking at in terms of data. They rarely, if ever, give specifics - preferring to stick to vague generalities. I wouldn't be surprised if they made their decisions based on in-house analysis and then let the crowd play guesswork games over what the central bank is actually seeing.