FORTUNE -- The Federal Reserve has its back against the wall.
Janet Yellen inherited a Fed two months into pulling back on its bond purchases, and heavily signaling that it would continue. But given how weak the January jobs number was it's a good time to ask whether it should.
The conventional wisdom was to ignore December's weak jobs number. It was due to the weather. You can't say that about January. The sectors that are normally hurt by weather, like construction, added workers. And the number of people who said they couldn't get to work because of the weather was actually lower than an average January. By my calculation, adjust January's jobs number for the weather and we actually lost 84,000 jobs, which would rank as the worst month since mid-2010.
Still, even if you go with the government's jobs number, we have just had the worst two-month job stretch since January 2011. So why taper now? The fact that bank lending remains weak is another sign of a need for more monetary stimulus. The housing market recovery also appears to have stalled.
The main argument to taper was that ultra-low interest rates were inspiring bubbles. Yet the bubbles the Fed appears to be worried about have already deflated. Stocks have pulled back, and the market, as measured by the S&P 500 (SPX), has a price-to-earnings ratio of 19, based on last year's profits. That's historically on the high side, but it's not in bubble territory. Junk bond issuance is down this year. Mortgage lending has stalled. It's really hard to have bubbles without excess lending.
The one bubble the Fed might be worried about is the Treasury market. But bond prices have started to rise again, even as the Fed has been tapering. So pulling back on bond purchases hasn't helped deflate that bubble.
Another pro-taper argument is that other than the job market, the economy does seem to be improving. GDP jumped in the second half of 2013. Still, the Fed's mandate is jobs. So as long as we are not getting employment growth, the Fed should keep its foot on the gas.
EARLIER: Did the Fed screw up?
The last reason to continue to taper is the market. Investors like certainty. And the Fed, more or less, has laid out a plan. Mess with that, and the market may go haywire.
The problem is that it appears investors already have doubts about the Fed. Last month, the stock market fell after the Fed announced it would continue to taper. Clearly, investors didn't think the Fed was going to follow through.
Some are saying that if the Fed reverses course, it will need a new gauge to measure the job market. Afterall, 6.6% seems pretty good, which is another argument for the taper to carry on.
But perhaps the unemployment rate is broken? Add in all the people who have stopped looking for a job and left the workforce, and the figure would be above 10%. At least some of those people, perhaps a lot of them, are baby boomers. So it's not clear how broken the 6.6% is. And if it is broken, how do you fix it? Who do we add back in? Another option, which is backed by debt-phobic economist Ken Rogoff, is for the Fed to target GDP. But again, what would it target? Three percent seems reasonable, and we are above that right now, and again, it looks like not enough people are finding jobs.
January's job growth was nearly half what it was for the same month a year ago, which was down by a third from the year before that. Ask anyone who is looking for a job how hard it is to find one. Ask the former executive who has now settled for a part-time consulting gig about the job market. Ask the people who just lost their unemployment insurance. It's pretty clear to nearly everyone that the economy is weak. Someone just has to tell the Fed.
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