Fox Business host Charles Payne argued on Wednesday that there are a lot of “red flags” in the economy ahead of the Federal Reserve announcing it would cut its target range for the federal funds rate by 0.50 percentage point.

The Fed's move comes after inflation fell to 2.5% last month and job growth in July and August weakened more than expected. Payne noted on “Making Money with Charles Payne” that it took three negative economic indicators before the Fed decided to cut rates. (Related: Experts say one of Kamala Harris' tax proposals could be an 'economic doom machine')

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“If you look historically — now, we go back 14 recessions from the first rate cut — unemployment over the past year typically rises 9% in a recession and falls 10% in the absence of a recession. The unemployment rate has been rising at a much faster rate than it was before the first rate cut,” Payne said. “Real GDP has actually been pretty good.”

Payne stood in front of the chart, consulting it. Kobeisi's letterprovides commentary on global capital markets.

This is incredible:

The current savings rate for American adults is lower than any other interest rate cutting cycle in history.

The current savings rate is 2.9%, less than one-third of the historical average of 8.9% seen during past rate-cutting cycles, according to Reventure.

moreover,… pic.twitter.com/bhDDKdbXbn

— Kobeissi Letter (@KobeissiLetter) September 18, 2024

“That's a red flag,” Payne said, cautioning about the unemployment rate rising 12.2% year-on-year. The Fox Business host said real GDP growth of 2.6% year-on-year was “fine.”

“But look at this. U.S. debt is up 123 percent. That's clearly a red flag,” he added. “The savings rate has plummeted to 2.9 percent. Normally it's 8.8 percent… There were a lot of red flags here.”

The rate cut marks the first change in policy from the Federal Reserve since July 2023, after the Federal Open Market Committee (FOMC) kept interest rates unchanged at a 23-year high of 5.25% to 5.50% for the eighth consecutive session. The rate cut came after the Fed revised down its employment forecast for the period April 2023 to March 2024 by more than 800,000 jobs.

In the United States, credit card delinquency rates are at their highest in the past decade, with roughly 10% of credit card balances being delinquent in the past year. According to To the Federal Reserve Bank of New York.

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