“This increase in the unemployment rate has been, in the past, consistent with ‘early in recession,’” Sahm said on Bloomberg Television’s Bloomberg Surveillance program, referring to the unexpected climb in the jobless rate seen in Friday’s July employment report. “We might not be there, but we’re getting uncomfortably close to that situation.”

The report showed US hiring slowed markedly while the unemployment rate rose to 4.3%, causing its three-month moving average to exceed the 12-month low by half a percentage point, and triggering the so-called Sahm Rule. Sahm came up with the statistical observation to help guide fiscal policymakers on when they should stimulate to counter a recession.

“We do come into this in a position of strength, broadly speaking,” Sahm said. “If we look at all of what we know about the US economy right now, it is very unlikely that we are in a recession.”

Fed Chair Jerome Powell last Wednesday said, ahead of Friday’s release, that the “total scope” of data to that point had indicated a “normalizing” labor market. Indicators for the first half of the year were “not signaling a weak economy,” he said, pointing to a low level of layoffs, “solid” spending and a pick-up in investment.

‘Panic Word’

With financial markets plunging, and “the panic word” looming large for many, Sahm said it would be inappropriate for the US central bank to act immediately in response to rising risks. “Calm is important at a moment like this.”

“The fact that the Federal Reserve is slow moving and deliberate, it’s a good thing, right? The last thing we need is them joining into that” emotional energy, she said. At the same time, Powell and his colleagues may take account of shifts in the economy and in markets, she said.

The S&P 500 Index was down over 3% as of 10:30 a.m. in New York, and is on track for it worst session in about two years.

Sahm, chief economist at New Century Advisors, said the Fed is “very deliberate. It can be very slow moving. But when, when the facts change, and it gets its mind around it, it will move and it will do what it has to do.”

With the Fed’s benchmark currently in a 5.25% to 5.5% target range, policymakers “are in a position right now where they have the ability to do quite a bit,” Sahm said.