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U.S. job reductions reach a 17-year peak, presenting encouraging indicators for bitcoin advocates.
Unofficial economic metrics indicate the Fed might need to loosen policy, benefiting riskier assets.
U.S. layoffs surge. (geralt/Pixabay modified by CoinDesk)
Key points:
- In January, planned layoffs in the U.S. more than tripled, reaching their highest point since 2009, indicating a notable downturn in the job market despite strong official payroll statistics.
- Private metrics, which include Challenger layoff statistics and a blockchain-based real-time inflation measure, indicate slowing growth and disinflation that may compel the Federal Reserve to reduce interest rates.
- Expectations regarding Fed policy are sharply divided. Some analysts predict significant easing that might bolster risk assets such as bitcoin, which has seen a nearly 50% decline from its peak value.
The U.S. labor market is rapidly cooling, a critical development that could lead the Federal Reserve to relax its monetary policy, potentially stabilizing bitcoin prices .
According to data monitored by global outplacement firm Challenger, Gray & Christmas, planned layoffs surged by 205% to 108,435 in January. This marks the highest figure recorded since January 2009, a period following the collapse of Lehman Brothers that led to a global economic downturn.
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Compared to the previous year, the layoffs announced increased by 118%, highlighting a significant decline in the labor market during the first year of Donald Trump’s second term as president. The technology sector reported 22,291 job cuts, with Amazon (AMZN) responsible for a majority, while United Parcel Service (UPS) announced 31,243 planned layoffs.
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Andy Challenger, a workplace expert at Challenger, Gray & Christmas, remarked that this is a significant figure for January, which is typically a weak month for hiring.
"This indicates that many of these plans were finalized at the end of 2025, reflecting employers’ pessimism about the outlook for 2026," Challenger stated.
This data contrasts with the monthly payrolls report from the Bureau of Labor Statistics, which continues to portray a robust labor market.
Private reports are increasingly serving as early indicators, suggesting emerging vulnerabilities ahead of the official data. Earlier this month, the blockchain-based Truflation revealed a sharp decline in real-time inflation, dropping below 1%, while the official Consumer Price Index remains above the Fed’s 2% target.
These unofficial metrics imply that the Fed may need to soon adopt a more accommodative policy by reducing borrowing costs to stimulate the economy. Such easing could favor assets like bitcoin, which is currently down nearly 50% from its all-time high exceeding $126,000.
This month, the Fed maintained the benchmark borrowing rate in the 3.5%-3.75% range while expressing concerns regarding inflation. Analysts’ forecasts regarding future actions vary widely.
JPMorgan anticipates the Fed will keep rates steady throughout this year and may raise them sometime in 2027, while other financial institutions predict at least two rate cuts of 25 basis points this year.
An economist who accurately forecasted Japan’s fiscal challenges expects Trump’s nominee for Fed chair, Kevin Warsh, to implement a 100 basis point rate cut before the mid-term elections in November.
