Fed reducing rates due to labor market deterioration risk, says economist Claudia Sahm

Core Insights - The lack of federal statistics, particularly on employment and unemployment, is creating uncertainty in assessing the labor market and potential recession risks [2][3][4] - The Federal Reserve's decision to reduce rates is driven by concerns over a deteriorating labor market and slow job creation potentially leading to job contraction and recession [2][4] - Current recession indicators are not reliable due to significant fluctuations in labor supply and participation, complicating the interpretation of unemployment rate changes [5][6] Labor Market Analysis - There is a wealth of private sector data and surveys available, but the absence of core federal data limits confidence in labor market assessments [1][2] - The unemployment rate indicator is currently at 0.1%, well below the recession threshold of 0.5%, suggesting that the economy is not in a recession based on this metric [6] - Changes in labor supply, particularly due to immigration and labor force participation, have historically influenced unemployment rates, making it difficult to draw conclusions about recession status [5][6]