Tags: LaVorgna | jobs | December | taper

Deutsche Bank's LaVorgna: November Jobs Data Likely to Spark December Tapering

By    |   Monday, 02 December 2013 12:13 PM

While economists' consensus forecast has the Federal Reserve beginning its tapering of quantitative easing (QE) in March, Joe LaVorgna, chief U.S. economist at Deutsche Bank, says there's a good chance tapering will start this month.

Strong November jobs data, due Friday, could get the Fed to move, he tells CNBC and Yahoo's Talking Numbers.

LaVorgna believes non-farm payrolls rose around 185,000 last month. That's below the 204,000 gain in October and the year-to-date average increase of approximately 190,000, LaVorgna says.

But he believes the November number will ultimately be revised higher. "Over the past few years, employment has tended to be revised up by roughly 50,000 a month," he states.

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A 185,000 gain Friday, combined with a 50,000 upward revision would put the total a bit above 200,000, which has been the range of the past three months.

"If we get something along the lines of our forecast, I would say the Fed tapers," LaVorgna asserts.

"My sense is that the Fed really wants to get out of this QE as soon as they can. And, if they get some data that surprise to the upside, that will be the excuse to do so."

In a Bloomberg News survey of 32 economists last month, the median forecast was that the Fed will trim its monthly bond purchases to $70 billion from $85 billion starting in March.

The strong October jobs gain "at least brings December back on the table [for tapering], but in the end they're not going to have enough evidence to pull the trigger," Stephen Stanley, chief economist at Pierpont Securities, told Bloomberg in the survey.

"Part of the reason they keep putting off any pullback in accommodation is that they're continually disappointed in the outlook."

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Economy
While economists' consensus forecast has the Federal Reserve beginning its tapering of quantitative easing (QE) in March, Joe LaVorgna, chief U.S. economist at Deutsche Bank, says there's a good chance tapering will start this month.
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2013-13-02
Monday, 02 December 2013 12:13 PM
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