The latest U.S. jobs report is out, and the data presents an extremely bizarre set of “contradictions.” The market is confused by this, and the Fed’s next move has also become unclear.
New job creation collapses, but the unemployment rate keeps falling?
First, let’s look at the Non-Farm Payrolls (NFP) data. The market had initially expected an increase of 80,000 jobs, but it unexpectedly plunged to just 23,000. This suggests that net job creation in the U.S. is currently in a near “zero growth” state. But the strangest part is that even as job opportunities have dropped sharply, the unemployment rate has fallen from 4.5% last November all the way to 4.1%.
Unmasking the illusion behind the falling unemployment rate
Why is there less work, yet the unemployment rate is lower? The reason is that the labor force participation rate has fallen sharply—from 62.5% to 61.4%. This means a large portion of the population has simply given up looking for jobs, and in official statistics, people who aren’t searching for work are not counted as unemployed. This creates a data illusion that makes the unemployment rate appear to be dropping.
A recession hasn’t arrived yet—companies are freezing hiring but not laying anyone off
Although the overall data looks bleak, the number of people applying for unemployment benefits for the first time is currently extremely low—about 189,000. This shows that although many companies have stopped hiring new staff, they also don’t want to lay people off. As long as the market hasn’t sparked a large-scale wave of layoffs, we haven’t truly entered the vicious cycle of a recession.
This contradictory employment-market report puts the Federal Reserve in a policy dilemma. Based on historical experience, in this kind of uncertain mid-election year, no matter whether the Fed decides on September 16 to raise rates or not, the U.S. stock market has a very high probability of launching a clear downward correction before the end of September.
For cryptocurrency and U.S. stock investors, this report is an early warning. Instead of chasing prices blindly right now, prepare cash and stablecoins. When the market sees a panic-like pullback in mid-to-late September due to mixed macroeconomic data or decisions by the Federal Reserve, that’s the best time to firmly execute the “buy the dip” strategy and build positions in high-quality assets at lower prices.
