Unemployment Rises – Trustnodes

The unemployment rate in the United States has risen for the first time in nine months, increasing to 3.7% from 3.5%, higher than in 2019.

“In August, the unemployment rate rose by 0.2 percentage point to 3.7 percent, and the number of unemployed persons increased by 344,000 to 6.0 million,” the Bureau of Labour Statistics said.

188,000 permanent job loses were seen in August, bringing that total to 1.4 million as numerous companies, especially in tech, announced layoffs and hiring freezes.

Adult men were also the hardest hit, suggesting that the first jobs to go may have been the better paid jobs.

This will make comfortable reading for Jerome Powell, the Fed chair, who has been orchestrating a slowdown of the economy to tackle inflation.

A loosening of the job market is one sign that his plan is working, in addition to the inflation rate falling in July.

A further fall is expected for August, although oil and gas rose at the end of last month. Yet, these signs of a cooling down of the economy may slow down the speed of interest rate rises.

Another 0.25% hike to 0.5% is on the table for the next Fed committee meeting with a 0.75% rise seemingly not being considered.

That will edge interest rates to about 3%, its highest level since 2008, with the speed of increase this time sharper than even in 2006 just before the big crash.

Thereafter you’d expect a pause in further hikes as even the next rate increase might be quite edgy amid clear signs good jobs are being lost.

The market has priced in the next hike in any event, but this unemployment data combined with the July slowdown in inflation may indicate Fed might take a wait and see approach for a while.

That should top DXY, the dollar strength index. Its relation to oil and gas prices is not clear considering they’re both denominated in dollars, but the pound is at its lowest against USD since 1985, while the euro has fallen below one dollar.

A topping of DXY therefore should make gas and oil cheaper in Europe, and bitcoin should be cheaper for europeans too since BTC is also mostly denominated in USD.

As the euro would buy more dollars, they would therefore be able to afford more BTC, but the euro itself is also becoming more expensive as ECB is set to further raise interest rates later this month.