Will job growth push the Fed to hike again?

Is a March interest rate hike back in the building? Or, to remove the Elvis analogy, is the Federal Reserve going to act later this month because job growth remains strong and market turbulence has suddenly subsided?

It seems clear that the Fed has not set the stage for a rate hike in March, irrespective of those factors, and irrespective of a huge move in Fed Fund futures which have shown an increased probability of a near-term hike.

Job seekers wait in line to meet with employers at the 25th Annual CUNY big Apple Job and Internship Fair at the Jacob Javits Convention Center in New York City.
Getty Images
Job seekers wait in line to meet with employers at the 25th Annual CUNY big Apple Job and Internship Fair at the Jacob Javits Convention Center in New York City.

I, along with a handful of others, have warned that the risks of recession have been rising of late, both abroad and at home, and that the Fed is likely to leave rates alone for some months to come.

I still believe that. True, we have maintained a solid pace of job growth. It is also true that some inflation measures have begun to move higher, approaching, or in a couple cases, even exceeding the Fed's 2 percent inflation target. Wages, too, are beginning to rise, but hardly at a rate that would induce a wage/price spiral.

Commodity prices have stabilized, albeit at depressed levels, and the dollar has backed off a Fed-induced high.

But many questions about the durability of the economic recovery remain. It is not clear to me that a cyclical bear market in stocks is over quite yet. We could see renewed turbulence in global equities if oil prices were to plunge, or if China's economic data, still weakening, were to fall entirely off a cliff.

It seems impossible to reconcile the idea that the economy is running so hot that the Fed needs to cool it down when the electorate is so quantifiably anxious about the economic prospects of the nation. That anxiety is expressing itself, in different tones, through the popularity of Donald Trump and, to a lesser extent, Bernie Sanders.

If one was to rewind the national video tape to 2006, or 1999, when full-blown, and synchronized, global recoveries were expanding at a break-neck pace, rate hikes were clearly justifiable. This economy bears no resemblance to the party atmosphere that existed at the height of the real estate and tech bubbles of each period.

Fast forward to today, and outside the U.S., the entire world is effectively in recession. The U.S. is currently the sole engine of global growth, with GDP expanding at a "torrid" pace of roughly 2 percent!

The Fed's experiment with normalization in December exacerbated market volatility, intensified capital flight from emerging market nations, put pressure on U.S. exports and multi-national profits through the transmission mechanism of a stronger U.S. dollar, and induced a sizable correction in equity markets around the world.

Another rate hike, be it in March, or maybe even June, could re-start that vicious cycle.

There are some readers who believe that I am in favor of easy money policies under any and all circumstances. That is simply not the case. I would love to see an environment in which interest rate normalization would be indicative of a strong self-sustaining period of economic growth, unthreatened by external risks, or internal weaknesses.

I just don't see it. Wednesday's ADP report gives the hawks the ammunition to push for more rate hikes, claiming that we are close to full employment and that, as a consequence, inflation is about to accelerate meaningfully beyond the Fed's target range.

However, the industrial sector remains in recession and is likely to continue shedding jobs. China, Japan, Brazil, Russia, Europe, particularly Italy, and Venezuela are in a precarious position.

True, the Fed's mandate is to focus on domestic considerations first and foremost. But I maintain that unless and until the external risks abate, the Fed would be wise to keep the U.S. growing until some other engine can help power the global economy back to health.

That possibility left the building long ago and I don't expect to see it re-enter the equation anytime soon.

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.