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Some Dark Clouds In The February Jobs Data

Fed policy makers should remember that employment lags all economic indicators.

Has the U.S. economy finally achieved that elusive so-called escape velocity?

Sure, Federal Reserve Chairman Jerome Powell said in testimony to Congress on Feb. 27 that "some of the headwinds the U.S. economy faced in previous years have turned into tailwinds," comments that led market participants to begin pricing in four rate hikes this year. And the jobs data for February, released Friday, added fresh fodder to that perception. But what should we think when two notorious Fed doves echo the new chairman verbatim?

Fed Board Governor Lael Brainard has always been judicious in using FedSpeak; her public appearances are few and far between and noteworthy for that very reason. It was telling that a March 6 speech was titled, "Navigating Monetary Policy as Headwinds Shift to Tailwinds."

Chicago Fed President Charles Evans used similar phrasing - "headwinds have become tailwinds" in a CNBC interview on Friday that followed the release of the stronger-than-expected jobs data for February.

Investors should pay heed to the news that the most dovish Fed officials are on board with a more aggressive tightening path. After all, the doves' chief aim has been to pull idled workers back into the workforce and to reverse the assumption that droves of able-bodied workers have been sidelined indefinitely. And that's exactly what's happening.

Beyond the headline number of 313,000 employees added to nonfarm payrolls last month, the real excitement came from the household survey data, which produces the unemployment rate and showed job gains of 785,000. Of those, 446,000 went to those aged 25-54, a cohort Powell cited many times in his inaugural congressional testimony.

In all, the number of those not in the labor force but capable of working fell to 95.4 million from 96.7 million. Looked at

This article was written by

Danielle DiMartino Booth makes bold forecasts based on meticulous research and her years of experience in central banking and on Wall Street. Known for sounding an early warning about the housing bubble in the 2000s, Danielle offers a unique perspective to audiences seeking expertise in the financial markets, the economy, and the intersection of central banking and politics. Quill Intelligence offers a daily option for subscribers, delivered every trading day morning.

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