Fed’s Lacker Sees Jobs Recovery Even After Weak Payrolls Data

Federal Reserve Bank of Richmond President Jeffrey Lacker said last month’s weakest job growth in almost three years doesn’t signify a shift in the outlook for a U.S. labor market that has “improved distinctly.”

Payrolls in December increased by 74,000, less than the most pessimistic projection in a Bloomberg survey, while the jobless rate dropped to a five-year low of 6.7 percent as more people left the workforce, Labor Department data showed Jan. 10. Putting the report in context “will take some time,” Lacker said to reporters today after a speech in Richmond, Virginia.

“We get an aberrational report like that from time to time, and it looks like it was one of those,” said Lacker, who doesn’t vote on the Federal Open Market Committee this year. “It doesn’t look like a harbinger of a shift in the trend.”

The Fed last month slowed its third round of asset purchases for the first time, to $75 billion a month from $85 billion, citing gains in the labor market. Policy makers pledged for more than a year to keep buying bonds until seeing a substantial improvement in the outlook for employment.

“The language we used to describe the program and how long it would last referred to the outlook for labor market conditions,” Lacker said. “That’s improved distinctly.”

Lacker dissented against continuing the purchases when he was a voter on the committee in 2012. He will have a vote again in 2015. The FOMC is scheduled to meet Jan. 28-29 in Washington.

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