The U.S. economy added a strong 353,000 jobs in January, beating market expectations and pushing Treasury yields higher. However, Chicago FED President Austan Goolsbee called for caution, arguing that the headline figure may not tell the whole situation.
In an interview with the Wall Street Journal, Goolsbee noted that total hours worked in January were weaker than the headline employment figure would indicate. This discrepancy suggests that the strength of the labor market may not be as solid as it first appears.
Despite strong employment data, Goolsbee warned that the Fed cannot afford to wait to cut rates if positive supply shocks are coming through the system. He emphasized that the central bank must be proactive in its approach to monetary policy.
Goolsbee also stated that if the labor market remains strong, it will ease concerns about the FED's employment mandate. However, he reiterated that the weakness in total hours worked indicates the January employment report was not as strong as the headline suggested.
The Fed will continue to monitor labor market conditions closely in the coming months.
*This is not investment advice.