ROCK MUSIC ♪ >> ERIC: TODAY THE U.S. LABOR DEPARTMENT RELEASED ITS JOBS REPORTS FOR JULY AND THE DATA FELL WELL BELOW EXPECTATIONS BY ROUGHLY 60,000 JOBS.

UNEMPLOYMENT RATE ALSO JUMPED UP.

WALL STREET'S REACTION?

THE DOW FELL NEARLY 800 POINTS.

THIS COMES ON THE HEELS OF THE FEDERAL RESERVE DECLINING TO CUT INTEREST RATES THIS MONTH.

MANY ECONOMISTS BLAME THE INTEREST RATE STATUS QUO FOR BAD ECONOMIC NEWS.

HERE WITH MORE, CHRIS FARRELL COVERS ECONOMICS FOR AMERICAN PUBLIC MEDIA.

WHAT'S UP WITH THE MARKET?

>> WELL, I THINK WE ALL NEED TO TAKE A STEP BACK.

>> Eric: ALL RIGHT.

>> WE NEED TO CALM DOWN.

YES, YOU'RE ABSOLUTELY RIGHT.

IN THE NASDAQ, WHICH IS TECH HEAVY, GOT A LOT OF TECH COMPANIES IN IT, IT'S IN WHAT WE CALL CORRECTION TERRITORY SO IT'S DOWN 10% FROM ITS JULY RECORD PEEK AND THERE IS A SENSE NOW, THERE IS THIS WHOLE CONVERSATION, YOU EVER BANK AMERICA, CITY CORP, THEY'RE SAYING THE FED WHEN IT MEETS IN SEPTEMBER NEEDS TO CUT BY ALF A PERCENTAGE POINT.

THE EXPECTATION IS THEY WERE GOING TO DO A QUARTER PERCENTAGE POINT AND ALL OF A SUDDEN THEY'RE BEHIND, THEY'RE BEHIND.

WELL, TAKE A STEP BACK AND THINK ABOUT HIS.

WILL THERE WAS A HURRICANE AND THAT PROBABLY DID HAVE AN EFFECT ON THE EMPLOYMENT NUMBERS, THE BUREAU OF LABOR STATISTICS SAID IT DIDN'T BUT A LOT OF ECONOMISTS ARE SKEPTICAL ABOUT THAT.

BUT ANYWAY, THE ECONOMY, IT GREW 2.8% IN THE SECOND QUARTER, THAT WAS DOUBLE WHEN IT DID IN THE FIRST QUARTER.

PRODUCTIVITY, DO MORE WITH LESS, YOU'LL ALWAYS HEAR THAT AT THE OFFICE.

>> Eric: LAYER THAT A LOT.

>> BUT ECONOMISTS LOVE PRODUCTIVITY, THAT'S THE BUILDING BLOCKS OF YOUR LIVING STANDARDS AND ECONOMIC GROWTH AND SO PRODUCTIVITY IS RUNNING AT 2.7% OVER THE PAST YEAR, THAT'S REALLY GOOD NUMBER, AND, YOU KNOW, THE -- WE STILL ARE HAVING EMPLOYMENT GROWTH.

SO THERE ARE REASONS TO BE WORRIED ND THE MARKET IS LOOKING FORWARD BUT I THINK THIS IS ONE OF THOSE DAYS WHERE EVERYONE IS JUST HYPERVENTILATING.

>> Cathy: CAN YOU -- PROBABLY TRUE.

CAN YOU GO BEHIND ON THE NUMBERS A LITTLE BIT HERE AND JUST SHED SOME LIGHT ON WHAT YOU THINK MIGHT HAVE HAPPENED?

YOU MENTIONED THE STORMS BUT IS IT -- WHAT ELSE MIGHT BE GOING ON BEHIND THAT NUMBER?

ANY IDEA?

>> SO PART OF IT IS -- YOU SAW A LOT OF GROWTH IN -- WHERE THE BIG GROWTH WAS WAS IN HEALTH CARE, AND ALSO IN CONSTRUCTION.

DRIVING HERE, DOWNTOWN St. PAUL, NOW YOU KNOW WHY THERE IS A LOT OF HIRING GOING ON IN CONSTRUCTION, RIGHT?

WE'RE NOT GOING ANYWHERE IN THE TWIN CITIES, WENT OUT TO EDEN PRAIRIE THE OTHER DAY ON 494.

>> Cathy: YEAH, GOOD LUCK.

>> THE CONSTRUCTION IS NOT SURPRISING THAT IT WAS STRONG.

BUT THIS IS AN ECONOMY THAT CONTINUES TO ROW, THE LABOR FORCE PARTICIPATION RATE CONTINUES TO GO UP.

THE UNEMPLOYMENT RATE DID GO UP BUT IT WENT UP BECAUSE MORE PEOPLE WERE LOOKING FOR WORK, SO WHICH WOULD HELP DRIVE UP THE UNEMPLOYMENT RATE.

SO, AGAIN, THERE ARE CRACKS, THERE'S NO QUESTION THERE ARE CRACKS, UNEMPLOYMENT RATE AT 4.3%, YOU GO BACK TO APRIL OF 2023, IT WAS 3.4%, SO, CLEARLY, UNEMPLOYMENT'S GOING THE WRONG DIRECTION.

CONSUMERS' CREDIT, CONSUMERS ARE SEEING SOME STRESS, WE HAVE ISSUES GOING ON WITH THE HOUSING MARKET, SO THERE DEFINITELY ARE STRESSES IN THE ECONOMY.

I DON'T WANT TO MINIMIZE 'EM BUT I DO THINK THAT IT IS AN ECONOMY THAT IS CONTINUING TO GROW.

>> Eric: CUSTOMER RECESSION?

ARE WE ON THE CUSP OF A RECESSION?

>> NO, WE ARE NOT ON THE CUSP OF A RECESSION.

NOW, YOU MAY CALL ME BACK IN A COUPLE OF MONTHS AND SAY, CHRIS, YOU SAID WE WEREN'T ON THE CUSP OF A RECESSION.

BUT WE'VE BEEN TALKING ABOUT A RECESSION FOR THE PAST TWO YEARS AND, LOOK, IT'S STILL A 4.3% UNEMPLOYMENT RATE WHICH HISTORICALLY IS A LOW RATE.

THERE ARE THINGS TO WORRY ABOUT, THERE ARE THINGS WHY THE FED NEEDS TO START CUTTING THE RATE.

IT DOES NEED TO START -- AND WE'LL HAVE SEVERAL CUTS IN A ROW, NO QUESTION -- >> Cathy: DID THEY WAIT TOO LONG TO CUT RATES?

>> PERSONALLY, I THINK THEY DID BUT I DON'T THINK IT WILL MAKE THAT BIG A DIFFERENCE BUT THEY ARE GOING TO ACT THE NEXT SEVERAL MEETINGS.

>> Eric: IS THIS TOO EGG HEALED TO ANSWER WHAT'S THE SHAM RULE?

>> THAT'S ABOUT -- WHEN YOU GET A -- OKAY, WHEN YOU GET MORE THAN HALF A PERCENTAGE POINT INCREASE IN THE UNEMPLOYMENT RATE, RELATIVE TO THE THREE MONTHS WHERE IT WAS THE AVERAGE AT ITS LOW, IT'S A SIGNAL THAT YOU'RE IN RECESSION.

>> Eric: HOW DO WE STAND ON THE THAT METER?

>> IF YOU LOOK AT THAT METER, YOU SAY WE'RE LOOKING AT A RECESSION.

BUT SHE HER SHHH SPECIFICALLY SELF HAS SAID IT'S A STATISTICAL REGULARITY, I WOULD BE SUSPICIOUS OF IT.

IT'S ANOTHER ONE OF THOSE RULESE WORRIED, THERE ARE REASONS TO BE WORRIED.

THERE ARE GOOD REASONS TO BE WORRIED.

THE FED SHOULD BE CUTTING ITS INTEREST RATE, THAT'S ABSOLUTELY TRUE BUT THIS NOTION THAT WE'RE NOT CUSP OF AIRY SESSION OR THAT WE'RE IN A RECESSION WHEN AN INFLATION RATE IS COMING DOWN, THE ECONOMY IS CONTINUING TO GROW AND THE UNEMPLOYMENT RATE IS 4.3%.

IT JUST DOESN'T KNIT TOGETHER INTO A RECESSION.

>> Eric: I THOUGHT YOU WOULD BE IMPRESSED I THROUGH OUT THAT RESULT.

>> Cathy: HE BROUGHT THIS UP IN THE BRIEFING AND I SAID WHAT ARE YOU TALKING ABOUT?

>> EVERYBODY SNOWS THE