How can the Fed justify bringing interest rates down again?

Blowout job growth in February creates jobs, hope … and complications.

The Labor Department announced there were an astoundingly large 273,000 new jobs created in February. That was almost 100,000 more than the “experts” were predicting.

Even better, job gains for December and January were revised upward by 85,000.

Jeez, that’s wonderful. And Trump should be doing jigs, except that the coronavirus and other distractions are probably keeping him too busy for dancing.

The big complication comes for the Fed, which is expected to cut rates again next week.

So how can the Fed justify bringing interest rates down to near zero — again — when the economy seems to be doing super? In fact, the Atlanta Fed bank raised its first-quarter growth to an annualized rate of 3.1 percent based on the job figures.

Three percent seems to be the White House’s magic number since that’s what the Trump administration has been promising.

Here’s the other complication.

The virus, if it keeps upsetting world markets, is likely to cause slower growth in the US. And if the Fed uses up all its rate cuts now, it will have to go back to the sorcery — quantitative easing — that got us into this mess to begin with.

The Fed is already doing repurchase agreements — repos — like the world is coming to an end, including buying back $85 billion worth of bonds last week to re-liquidify the financial system.

There’s this other problem that I mentioned last week when I said the job figures could be strong. The large gains in February could have been caused by milder than normal winter weather in many parts of the country.

When this happens, the normal seasonal adjustments used by the Labor Department could make the job market look like it’s booming more than it really is.

And, inevitably, the following months will be weaker because companies already did their hiring months earlier.

And that makes it difficult to determine what type of monetary policy is appropriate even in normal times — which this isn’t.

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