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Unless it will be revised in the future, the gain of only 74K jobs in December is a huge disappointment, the weakest in over two years, and this overshadows everything else. It could still be seen as a one off, but we’ll need a return to 200K next month in order to shrug off this big miss.

After a streak of good figures for both Q3 and Q4, this December NFP breaks the trend and certainly complicates Bernanke’s last FOMC at the end of the month. It already seemed that another taper is in the works, and now it is much harder to tell.

Blaming the bad weather can work as a sweetener, but it doesn’t sound like the real reason behind such a big drop.

Unemployment rate

Apart from the uncertainty about the direction of the US economy, there is uncertainty about the value that we get from the unemployment rate. A weak job gain, which is undoubtedly below stall speed, still generated a drop of 0.3% in the unemployment rate. This is due to the drop in the participation rate.

While a Fed research ties the drop in participation rate almost entirely to retirement and not to discouraged workers, the unemployment rate seem not as credible as it used to be.

Fed thresholds

At 6.7%, the the unemployment rate is below the 7% level that Bernanke mentioned in June 2013 as a potential trigger for ending QE. After the Fed tapered from $85 to $75 billion in December and plans to end QE by the end of the year, can it stop QE altogether now? Especially after the dismal job gain?

And, at 6.7%, we are only 0.2% away from the 6.5% threshold (not trigger) at which the Fed could potentially raise rates. Can it happen later in the year? Certainly not.

The result of this report could be an overhaul of the Fed’s forward guidance and perhaps even a change of its unemployment mandate some day.