August's jobs report results fell short of expectations, adding only 142,000 jobs while the unemployment rate ticked down to 4.2%. New Century Advisors chief economist Claudia Sahm joins Julie Hyman and Josh Lipton to discuss recession concerns and the Federal Reserve's rate cut outlook following this report.

Sahm, a former Federal Reserve Board economist, characterizes the labor market data as "not good" and indicative of a total slowdown. She notes that the labor market is cooling "in part because of an intention of the Federal Reserve to slow things down" to ease inflation. However, she believes it's time for the Federal Reserve to back off.

"These numbers, while they are not recessionary, aren't good. And the labor market that has been great for the past years is starting to really slip," she tells Yahoo Finance. Sahm is the namesake for the Sahm Rule, one of the Fed's key recession indicators.

Sahm believes a Fed decision to cut interest rates by 50 basis points would be justified "as a recalibration." She points to a series of labor data indicating a weak labor market and notes that "the trend looks worse than anybody could've known."

"It is not a 50 basis point in a 'the bottom is falling out and the recession is nigh' sense. It's just 'hey, things are slowing and we misjudged how quickly they were slowing, and we're gonna get on top of it,'" she explains, stating there is "no magic number" to solidify a Fed rate cut.

Find out what the Fed's Sahm Rule is and how it can be used in conjunction with labor data to assess the odds of a recession.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Angel Smith