The January jobs report is set to be released tomorrow at 8:30am EST
And the White House is already lowering expectations
Trade adviser Peter Navarro warned that the numbers could come in much weaker than expected, saying:
“We have to revise our expectations down significantly.”
His main explanation was that roughly 3 million undocumented immigrants have reportedly left the country since Trump returned to office, shrinking the labor supply
We also heard similar messaging yesterday from Kevin Hassett who said to expect a cooling labor market in the data this week
Taken together, it feels like officials are preparing markets for a weak print
If this guidance is accurate, tomorrow’s jobs numbers could look ugly
We will be watching these numbers closely ⬇️
⬆️ Nonfarm payrolls rise 22,000 well below expectations of $46,000
Here’s what this tells us about the labor market:
The job market is clearly losing momentum.
Hiring has slowed dramatically from December's already weak 37,000.
Education and health services gained 74,000 positions but professional services lost 57,000 and manufacturing shed 8,000.
Another red flag:
Private job creation for 2025 totalled 398,000 which is roughly half of what we saw in 2024.
In short, the labor market is weakening on a year-over-year basis.
But here's the silver lining:
A softer labor market gives the Fed more room to cut rates which could support liquidity and risk assets.
We’ll get further confirmation with Friday’s BLS report
Unemployment rate is still on the higher end at 4.4% ⬇️
⬆️ Will a rate cut even stimulate job creation or will it lead to more investment in AI tech that requires less human workforce ?
With declining working age population how many jobs do we need?
The unemployment rate may be the better gauge ? The Fed's old playbook is outdated 👀
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