On the January Jobs Report

A big miss, moving the labor market toward confirming that we are entering the first-ever recession caused by too-low oil prices, and nudging the Fed toward the dovish. The huge downward revisions to prior months are not as bad as they look – all of 2015 was revised lower in the annual re-benchmarking exercise. So November and December job gains actually remained strong, though the aggregate number of payrolls is lower than anyone knew. The downtick in the unemployment rate is only in small part due to annual recalibration of the “household survey.” But that recalibration does take the froth out of seemingly excellent jumps in labor force participation and employment. With hourly earnings higher, the lower unemployment rate keeps this disappointing jobs report from being dispositive for the Fed. But at this point, with central banks world-wide beginning to panic, the market is right: no more rate hikes this year.