Fed rate cuts come too late and layoffs show US economy is already in recession, says bond king Jeff Gundlach

• The Federal Reserve should have cut interest rates much earlier, according to Jeff Gundlach.

• The “Bond King” believes that The economy is already in recessionas evidenced by the increase in layoffs.

• Job cut announcements rose 193% over the past month, according to a Challenger report.

The Federal Reserve is cutting interest rates too late as mounting job losses show the US economy is already in recession, according to Jeff Gundlach.

The billionaire “King of bonds” and DoubleLine's CEO pointed out the Early rate move by the Fed On Wednesday, markets expect central bankers to cut the federal funds rate by 50 basis points at the conclusion of their policy meeting. That will mark the first rate cut the Fed has issued in more than four years, a shift to prevent high rates from weighing too heavily on the labor market and economic growth.

But the economy has already slowed to recessionary levels, Gundlach said on a conference panel Tuesday, pointing to concerns around the weakening of the labor market.

“We're already in a recession,” Gundlach said at the event, according to Bloomberg. report“I see a lot of layoff announcements.”

Hiring has slowed steadily over the past year, even as GDP has continued to grow in recent quarters. Layoff announcements According to a report by consultancy Challenger, Gray & Christmas, employment rose 193% in the past month. Hiring plans for the year also fell to their lowest level on record, down 41% in August compared with last year, the report added.

Still, most experts say the U.S. economy remains on solid footing. GDP grew by 3% last quarter. Meanwhile, unemployment remains near historic lowswith an unemployment rate of 4.2% in August.

Gundlach, however, said he would give the Fed an “F” grade for its performance in recent years. Central bankers raised interest rates by 525 basis points in 2022 and 2023 to reduce inflation, but they should have responded to inflationary pressures much sooner, he said, which could have prevented interest rates from staying too high for too long.

“I think they're going to cut the interest rate by 50%. It seems way out of line,” Gundlach said. “The Fed is way behind the times and should get its act together.”

Markets will be watching the Fed's upcoming rate decision and Powell's prepared remarks on Wednesday afternoon. The Fed chief is expected to provide guidance on the path forward for rate cuts as well as the outlook for the labor market and economy.

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