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How Will Jobs Numbers Influence the Fed?

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    RBC Capital Markets chief U.S. economist Tom Porcelli weighs in on job growth and the Fed.

  • Duration 4:24
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As well on the call thank you very much we'll stay on this jobs number could today's disappointing jobs number mean more easing from the Fed big question your Tom Purcell -- Chief US economist at RBC capital markets joins us now.

That is the question here does this signal to the Fed they gotta do something when you get a number this -- for the jobs.

Yeah I don't think this number alone is going to push them over the edge but I think you have to realize a couple of things.

As much as the Fed made it very clear I think Bernanke -- himself.

That they would prefer not to go the route of QE that their appetite is small for QE I think their appetite is even less for an economy that's not getting a lot of momentum so.

I think from that perspective certainly this number we keep.

The odds I would argue -- for QE but certainly just doesn't push it over the edge.

What what are not to the -- could also milking the fact that we had revisions upwards in the past we always get these numbers next thing you know they're getting revised up or down this time was up.

Does that building in May be economy -- little more stable in the market seems to be receiving today.

So this is actually really good question I think what you have to remember back to Bernanke's last post FOMC press conference.

What he said was that he was expecting a ranger and jobs of about a 150 to 200000.

When we first heard that we actually felt a little while actually bet that then the hurdles actually quite high for QE could we just figured it -- getting at least 150 in -- our call.

For getting at least 150 it would seem pretty achievable however if you look at the last two months now.

If you average the last two months job growth -- averaging a 135000.

Sort of she below.

What was I think a pretty modest range given by the chairman.

Yes let's talk about manufacturing hitting -- lesson here on the show by the let me talk about average weekly earnings.

Average weekly earnings unchanged it and again going to that manufacturing number 161000 the estimate was 22000.

Run a single parent could be unfortunately that we're gonna see a slowdown in manufacturing that could be an an overall negative for the economy that could affect GDP Tom are you concerned about that.

Yeah I think it you know -- we -- let you hold up you know for pretty well RBIs and number itself which is you know does -- a pretty good job of being a leading indicator.

It does suggest a manufacturing -- gonna hold up and I think your earlier point on average weekly earnings.

I think would have to consider is defined let's say manufacturing holds up manufacturing is 10%.

Of economic output in the US it's not enough.

To have a robust recovery what you need is for the consumer to jump on board but unfortunately -- that average weekly earnings number what we saw in this payroll report.

If that it was actually very soft it was flat this month it was negative last month and real -- to sell actually negative on a year on year basis.

So the consumers effectively.

We get to the running out of ammunition certainly they could dip into savings that's -- do we wanna see when you think about that that the current level of ammunition.

Seeing average weekly earnings stagnant -- it's not what you wanna see particularly sarge molest boys is an important one.

Particularly because and 2013.

You hit a fiscal brick wall.

And if you don't have something that's gonna chip away at this massive fiscal drag -- awaits us then you're talking about another potential downturn in the economy when he thirteen.

Halloween just got -- comment from President Obama just moments ago he addressed the issue of jobs let's listen to this wanna get your reaction on the other side.

There's a lot of -- I work which means -- we've got to do more.

If we're gonna recover all the jobs that -- lost during the recession.

And if we're gonna build a secure economy.

That strengthens the middle class -- we're gonna have to do more.

What is more Tom.

-- I don't think there's more that they can do I mean again it's.

It's nice for politicians to wanted to express this idea that that they can do more but the real the reality is there's very little they can do the one thing I would tell you though is if you want to really start to see small business.

Hiring in advance you wanted to small business sector to really participate.

And unfortunately -- no small business sector.

You know they if you if you ask them what their two biggest concerns are there to.

One is government regulation and the other is the lack of sales the lack of people walking through their sort of buy their goods.

The government obviously has the ability to ease back on some regulations that are out there -- maybe that'll help jumpstart the small business hiring but.

But but again I I think in the current environment -- during the current heated political environment I think that's a really tall order.

Tom course Sally is great to have you wanna daylight today a heck of a number not to -- -- again -- Tom thank you very much and thanks a lot.

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