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Fed Vice Chairman Clarida: December jobs report is 'clearly a setback'

Yahoo Finance's Brian Cheung joins Kristin Myers to break down Fed Vice Chairman Rich Clarida's comments on the disappointing December jobs report.

Video Transcript

KRISTIN MYERS: We have Yahoo Finance's Fed whisperer, Brian Cheung, here with us now to bring us the latest comments from Vice Chair Clarida's outlook right now, especially we had those disappointing jobs figures out this morning. Hey, Brian.

BRIAN CHEUNG: Hey, Kristin. Well, we're hearing from the first Fed policymakers since that report dropped this morning. Fed Vice Chairman Richard Clarida making remarks at around 11:00 AM this morning, saying that overall, quote, "the picture was a little more balanced than the headline number, which was disappointing." You'll recall, as you've been discussing at length during this show, that there were 140,000 payrolls lost in the month of December. But the vice chairman added that although it was clearly a setback, he said, quote, "it's not something I would expect to continue into the new year."

This suggests that the Fed, the vice chairman at least, for his part, does not expect to see negative numbers in the coming months. That might be squaring with some other economists' outlooks, who have argued that-- obviously, with the winter continuing, it's not going to get any warmer in February than it was in January or December-- that we could continue to see some more losses as the unemployment rate remains at a 6.7% level, still well above where we were pre-crisis, which just really shows, Kristin, how much farther we have to go in this recovery.

KRISTIN MYERS: Absolutely. That unemployment rate staying steady in December from the month of November, as well as that labor force participation rate. But give us what the Fed's outlook is on the economic recovery in 2021.

BRIAN CHEUNG: Yeah. Well, we've heard from Fed Chairman Jay Powell, at least as recently as his press conference back in December, that the first half of 2021 was going to be difficult but that he was optimistic we would see a pretty strong rebound in the second half of this year. All that, of course, is contingent on the roll-out of the vaccines. We appear to be rolling through what is new high after new high on the amount of cases in this country, especially with worries over that new strain.

But the Fed optimistic that it can get back on track by the end of this year. What that spells for rate hikes or even the tapering of its quantitative easing program remains to be seen. Rich Clarida, for his part, saying earlier this morning that we're not close to anything that would allow us to start tapering the quantitative easing program, and that especially we're not ready to raise rates quite yet. Kristin.

KRISTIN MYERS: Absolutely. It is definitely going to be a tough year. Although it's well noted, some of your points, at least when it comes to the labor market, January and February colder even than the month of December. And with coronavirus still surging, it's going to be a long slog ahead in the economic recovery. Yahoo Finanace's Brian Cheung, thanks for bringing us those updates.