The September jobs report turned out to be a disappointment with fewer than anticipated jobs gains and labor force participation at its lowest rate since October of 1977.
CNBC’s Squawk Box discussion of the disappointing report quickly turned to Federal Reserve policy and whether it vindicated the Fed’s decision not to raise rates, or just proved they missed their chance to do so.
CNBC on-air editor Rick Santelli reacted to the jobs report with concern about the economy and criticism of the Federal Reserve for creating a “new normal” of zero percent interest rates calling it “bad policy.”
"[I]n the end they missed their opportunity and now this makes me a lot more nervous about the economy. We're not creating great jobs, but we are creating jobs. A lot more than I would have thought a couple of years ago, but it looks like all that's changing,” Santelli said of the Federal Reserve bank and the fact that it has not yet raised interest rates.
Panelist Steve Rattner, chairman of Willett Advisors LLC, the private investment group that manages Mayor Bloomberg's personal and philanthropic assets, claimed it vindicated the Fed but he did question the health of the U.S. economy saying, “The economy, I think, is clearly weaker than any of us would like it to be or thought it would be, and so I think the case for the Fed to raise rates is really a de minimis case at this point.”
Santelli called the Fed “a bit toxic,” accused them of missing opportunities to “normalize” interest rates and said their policy has confused the markets and many kinds of companies and financial institutions.
"If I was a cynical person, maybe if Joe [Kernen] was here today I'd say how convenient to get weak number after weak number with weak revisions to a Fed, who in my opinion, absolutely does not want to tighten but knows it needs to. This takes so much of that pressure away,” Santelli also said.
Santelli expressed concern that if the economy heads into another recession, the Fed has no cushion to move rates anywhere but negative.
“You think the average guy on the street, you think your average retiree is gonna be psyched about negative rates in the United States of America?” Santelli asked.
The September jobs report was expected to show an increase of 200,000 or more jobs last month, according to forecasters polled by MarketWatch. Instead, the report showed only 142,000 jobs were created in September. The report included downward revisions for July and August too. CNBC’s Steve Liesman noted “weakness in the private sector.” The slower job growth also left the labor force participation rate at 62.4 percent, its lowest rate in nearly four decades.
Not only were the September job numbers disappointing, the Bureau of Labor Statistics revised job gains from July and August down by a combined 59,000 jobs. The report also noted that average hourly earnings dropped for the month, as well as average hours worked weekly.
The news sent Dow Futures down. Before the report futures were up, but quickly dropped 180 points into negative territory. Likewise, 10-year Treasury note yields dropped sharply and the Dollar lost ground against the Euro.