On January 9, 2015 (Friday), jobs report came out and it was little stronger than expected. 252,000 jobs were added in December 2014. The unemployment rate or jobless rate fell to 5.6% from 5.7%, the lowest since June 2008. I believe jobs rate for January 2015 will fall under 210,000, since many people are or were employed for holiday season only.
The most disappointing news of Non-Farm Payrolls was its earnings report. In December, average hourly earnings for all employees on private non farm payrolls decreased by 5 cents to $24.57. I believe this is only temporary. If it continues to drop, consumers of the business will be making less purchases. Therefore, business’s earnings will be weak too. When non farm payrolls come out for January, the earnings will rise back.
If Europe goes into crisis or recession (higher chance because decreasing inflation > deflation), it will have impact on the US in a negative way.
Earlier today, German CPI (Consumer Price Index) was released. It was weaker than expected. It’s the lowest since October, 2009. CPI is important for inflation. If it drops more (more likely will), deflation will be here both in Germany and spread to other Euro countries.
Japan is already in recession. Europe most likely will be next. It will spread to UK (United Kingdom). Japan, Europe and United Kingdom all have major impact on the economy of the US (United States). Therefore, United States might join the recession list. It’s like a domino effect. Everything starts from somewhere and spreads.
Greek crisis is worrisome. Greek may default and exit from Euro. Elections will be held 3 days after ECB, on Sunday, January 25, 2015.
On Thursday, January 22, 2015, ECB (European Central Bank) will release interest rates and there will be press conference. It will be closely watched as always. But this time, many are wondering if they will release QE (Quantitative Easing).
I believe ECB will delay QE because Greek elections are yet to be held. After the Greek elections, ECB will act on its next meeting.