No matter how you cut it, today’s unemployment report was awful. The headline 18,000 nonfarm payroll increase is bleak enough, but the news is even more depressing reading further into the report. For instance, jobs in the private sector fell by 13,000. Government employment accounted for the miniscule gain.

The odds of a recession are high and mounting. It looks like the Fed will be forced to cut its benchmark interest rate by a dramatic half-a-percentage point at its next meeting at the end of the month. The Fed will feel the pressure to act despite ongoing worries about inflation with the price of oil breaking $100 a barrell, the tandom rise in the price of food, and the decline in the dollar. My guess is that the Fed will try to contain any potential global capital market fallout by coordinating its actions with foreign central banks.

I also expect more talk out of Washington for tax cuts despite the budget deficit. As Richard Nixon famously remarked, “we’re all Keynesians now”. Or maybe Washington find solace embracing supply side economics when it come to dealing with a downturn in the economy.