How bad is tonight's non-farm payroll? Even Biden has spoken!

The latest US non-farm payroll data unexpectedly plunged, sparking concerns about economic recession, leading to a lower opening of the three major US stock indexes. After the data was released, US President Biden, Nick Timiraos, known as the "Fed megaphone" of the Wall Street Journal, Senator Warren, former chief economist of Allianz, El-Erian, and others all expressed their views, all of which seemed rather pessimistic.

According to The New York Times, US President Biden acknowledged in a statement that job growth is slowing down, but he placed it in the context of the economy returning to normal. He stated, "Today's report shows that while inflation is clearly falling, job growth is slowing even more."

Biden issued a statement on the July non-farm report, stating that since Vice President Harris and he took office, the US economy has created nearly 16 million job opportunities, with average unemployment rates lower than any government in the past 50 years, and income growth outpacing price increases. Today's report shows that while inflation is significantly decreasing, job growth is slowing even more. Business investment remains strong, to some extent thanks to the "Invest in America" agenda, which is creating high-paying job opportunities for underserved communities. Prices are still too high, and costs will continue to be reduced by cracking down on price gouging, limiting prescription drug costs, and building more housing.

The "Fed megaphone" Nick Timiraos posted on social media that Powell said on Wednesday that Fed officials do not want to start with a 50 basis point rate cut, but he said, "The more severe recession... is what we want to respond to." US Senator Warren even posted on X urging Powell to cut rates "now."

Former Allianz chief economist El-Erian said, "I am shocked by how quickly the narrative on what the Fed should do has changed in the market. Just a few days ago, it was widely believed that the Fed had time to wait until September to cut rates by 25 basis points, but this reassurance is being replaced by calls from more analysts and economists to cut rates quickly.

The non-farm report has added fuel to the 50 basis point rate cut in September. Seema Shah, Chief Global Strategist at AXA Investment Managers, said that the slowdown in the US labor market is now more clearly becoming a reality. The rise in labor force participation is certainly good news, as it dilutes the recession signal sent by the Sam rule. Nevertheless, a rate cut in September is a foregone conclusion, and the Fed will hope they do not act slowly again.

The market is worried that the Fed may have started cutting rates too late. Stuart Cole, Chief Macro Economist at Equiti Capital, said that weak non-farm data will inevitably make the Fed's rate cut in September look like a done deal. What may be more worrying for the Fed is that in the past, if data softened, people would expect inflation to be falling, rate cuts to be imminent, and the stock market to rebound. However, the stock market's negative reaction to today's data indicates that people believe the Fed is already behind the curve and should have cut rates earlier. If the Fed intends to delay rate cuts again, then the two CPI reports to be released between now and the September Fed meeting may need to significantly exceed expectations. **