Economist Warns Recession Hasn't Been Averted: 'Fed Will Figure It Out ... But It Will Be Too Late'

The Bureau of Labor Statistics' non-farm payrolls data shows that the U.S. economy added less jobs than anticipated in June.

David Rosenberg, an economist, weighed in on the data and its implications for the economy.

What Happened: When back revisions, multiple job holders and the birth-death model are accounted for, non-farm payrolls, in fact, contracted in June, Rosenberg tweeted on Friday.

The recession hasn't been averted or avoided, the economist said. "The Fed will figure it out at some point but it will be too late," he added.

Rosenberg's comments are in line with the views expressed by some analysts and corporate executives. They blame the Fed for basing its decision on lagging indicators and are worried about a looming recession if the central bank does not reverse its rate hikes.

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Why It's Important: Notwithstanding the soft payrolls data, the fed funds futures point to a 93% probability of a 25-basis-point hike during the July Federal Open Market Committee meeting. This would take the fed funds rate to 5.25% to 5.50%.

The June Fed meeting's minutes released last week and the recent speeches of Fed officials clearly suggest the central bank is in no mood to relent following the pause in June.

The next major data point that could have a bearing on the Fed move is the consumer price inflation report for June due next week. The average hourly earnings component of the June non-farm payrolls report showed that inflation remains stubbornly outside the central bank's target. The metric rose at an annual pace of 4.4% compared to the Fed’s 2% target.

Read Next: We Are On A ‘Golden Path’ To Lower Inflation Without Recession, Fed’s Goolsbee Says

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