Wharton School economist Jeremy Siegel was "shocked" by the strength of January payroll data but continues to see significant disinflation in the U.S. economy.
The unexpectedly strong jobs report released earlier this month spurred a near standoff in the stock market, as the data could mean that the economy will perform better than anticipated and that the Federal Reserve may impose higher interest rate hikes, Siegel said early Wednesday on CNBC's "Squawk Box."
The government reported a 3.4% unemployment rate for January — the lowest in more than a half century — and that nonfarm payrolls grew by 517,000, far more than anticipated.
"I will admit I was shocked by the strength of the January payroll," the finance professor said on CNBC. The market will see more data, including the Personal Consumption Expenditures (PCE) report, the Job Openings and Labor Turnover Survey and February payroll statistics, before the Fed's rate-setting panel meets March 21-22, he noted.
The PCE price index is the Fed's favorite inflation gauge.
Market Standoff?
Siegel said he thinks Fed Chairman Jerome Powell wants to raise the central bank's benchmark interest rate by 25 basis points in March, but if February payrolls are as strong as January's, "fifty is definitely on the table. I don't think it will be, but certainly January was a shocker in terms of how strong that labor market is."
