2014 was supposed to be the year that the economy took off. After new data from January was released, it looks as though this may not be the case. Only 113,000 jobs were added in January, which was lower than expected. The increase in jobs helped to bring down the unemployment rate to 6.6%. Some more good news was the expansion of the labor force, as well as a rise of 5 cents in hourly wages.
There were signs that January job growth may not meet expectations. A closely watched index of manufacturing activity tumbled last month and auto sales were lower than expected.
Robert Shapiro, chairman of economic advisory firm Sonecon and a former top official at the Commerce Department, viewed the lower than expected job growth as a "pause" in the economy's growth. “We need two, three, four more months of weak numbers before we say there’s any real problem,” he said.
Stuart Hoffman, chief economist for PNC Financial Services, was even more optimistic. He believes January's results will be revised upward when next month's data is released and that hiring will soon pick up. He claimed, "“We won’t strike out three months in a row. Keep the faith, baby, keep the faith.”
Economists are keeping an eye on the Fed's short-term interest rate, which has been promised to be kept near zero until "well past" the time the unemployment rate has reached 6.5%. With the rate already at 6.6%, economists will be seeking clarity from the Fed and how it will react once the line is crossed.
http://www.washingtonpost.com/business/economy/economy-added-11300-jobs-in-january-unemployment-rate-dips-to-66-percent/2014/02/07/9724cdb8-8f8f-11e3-84e1-27626c5ef5fb_story.html
Even though the economy didn't grow as rapidly as expected in January, the fact that so many economists predicted that it would will help us soon enough. With predictions that the economy and its consumers will be better off, consumers are more apt to spend more; in turn, this will indeed cause the economy to grow as expected. As Mr. Shapiro stated, if these disappointing numbers continue in the several upcoming months then we should begin to worry.
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