BusinessWeek Writes: Slow Job Growth Suggests Fed Was Right to Delay Taper
The private sector added 166,000 jobs in September, fewer than most economists predicted, according to the ADP Research Institute’s monthly tally. ADP (ADP) also revised August’s jobs number down to 159,000 from 176,000.
The September number’s not bad—it’s right in line with the 2013 monthly average of 167,000. But it’s certainly not evidence of a labor market that’s picking up steam.
“The ADP report suggests the Fed was right to delay the tapering of its monthly asset purchases last month,” Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a note this morning.
Here is the bottom line. Happy fingers Bernanke will keep playing with his keyboard as he continues to print $85 Billion of QE per month. That is not even a question. I do not believe they will tapper anytime soon if at all. This is not the real issue here.
The really scary issue is that the QE is having very little impact on the overall economy. The velocity of the QE money has slowed down so much that it is almost a non issue.
Imagine a car engine that is stuck on 2000 rpm no matter how much gas or even jet fuel you supply the engine with. No matter what you add to the tank, the engine can’t go over 2000 rpm. What’s worse, after a while it start to sputter and eventually dies.
You have that picture in mind? Well, that is an accurate representation of the US Economy. EQ is no longer having an impact. As such, they can’t even consider stopping it now.
Yet, the worst is yet to come. The economy is now starting to sputter even with QE. When that accelerates the downshift and the subsequent stock market and economic declines will be severe.
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