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Wall Street analyst: Fed jumped the gun

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Paul Bedard,Washington Secrets,Jobs,Federal Reserve,Ben Bernanke,Wall Street,Unemployment

Friday’s poor jobs report shows that the Federal Reserve, in one of Chairman Ben Bernanke’s final moves, may have moved prematurely to begin ending support for the slumping economy, suggests a top Wall Street analyst.

Lindsey Piegza, the chief economist of Chicago's Sterne Agee, said that the employment report probably won’t prompt the Fed to shift, but will result in some heated debate about the future.

In her analysis to investors, provided to Secrets, she wrote:

“December’s disappointing employment report is probably not enough to divert the Fed from their tapering path, which began last month with a $10bn reduction and is expected to result in a second reduction in monthly bond purchases come January. As Bernanke put it, he expects ‘similar moderate steps going forward throughout most of 2014.’ Still, the dramatic pullback in job creation will at the very least result in some colorful conversation among committee members at the January FOMC meeting.”

She noted that the Fed moved to “taper” support in anticipation of a better jobs market, something that obviously didn’t happen.

Quoting comments following the last Fed meeting, she wrote: “Some officials warned, however, that progress towards a full recovery was not assured. And while there has been noticeable improvement in terms of the unemployment rate, other important elements of cyclical weakness in low labor force participation and still-high levels of long duration unemployment suggest a much less rosy picture. This morning’s report continues to highlight the divergence between the data.”

Her equityreports@sterneagee.com&source=mail">full note is here.

Paul Bedard, the Washington Examiner's "Washington Secrets" columnist, can be contacted at pbedard@washingtonexaminer.com.