The US unemployment data has beaten forecasts to go as high as 3.9% in February 2024. This is 0.2% higher than expected and caused a flurry of activity in the markets. The US Dollar nosedived to 8-week lows before recovering slightly and bitcoin recorded a new All-Time High (ATH) of $70,000 before dropping back below $69k soon afterward.
What is Happening in the US Jobs Market?
The US jobs market has been strong for the better part of the last 2 years. This has puzzled economists across the board. Conventionally, high interest rates slow down the economy and the US Federal Reserve had to raise them in 2022 and 2023 to control rampant inflation in the country.
The inflation did start to come down by the second half of 2023 but it was feared that the economy won’t be able to handle it. The Federal Reserve ideally wanted a “soft landing” for the overall economic setup but it did predict that the overall economic environment will remain tense because of the policy rates.
But, what happened was quite unexpected as the American job market remained strong and the unemployment rate kept declining despite the rate hike. According to the Department of Labor, the job market posted the lowest unemployment numbers in 2 decades in January 2023 at 3.4% and then again in April 2023.
Is the US Unemployment Finally Going to Surge?
Despite the unexpectedly rosy picture of the US job market, the situation is starting to change now. The unexpected high jump to 3.9% in February has rung alarm bells and all eyes will now be on the March figure. The American planners will be wishing for this to be only a hiccup and that can be proven if the next month’s statistics reverse the trend.
However, if unemployment soars past 4% in March, it will be at its highest since January 2022. Back then, the US economy was recovering from the effects of COVID-19 bailouts, and eventually, unemployment reached multi-decade lows of 3.4%.
However now, if March’s figures aren’t so great, it can mean that the US is headed towards a major unemployment surge and a weakening Dollar. This can, in turn, push the economy towards recession.
What has Bitcoin Got to do With it?
Bitcoin is often analyzed through the lens of conventional finance and the greenback-dominated fiscal space. The Dollar is the reserve currency of the world and therefore, the US economy is a major variable in the global economic system.
If the US economy hits a recession, the world also feels the shockwaves and follows it into the abyss. In these precarious times, Gold and other safe havens have a field day as investors rush to convert their money into something more substantial than fiat currency.
Bitcoin is on its way to becoming a financial safe haven like the precious yellow metal. So, if the overall economic situation becomes challenging, one can expect the BTC price index to appreciate strongly.
