The US economy now feels a bit like a dead cat bounce. The recently released US non-farm payroll data for April, under the impact of high tariffs and the enormous pressure from the US government, which has already laid off 280,000 people, surprisingly exceeded market expectations, with employment numbers reaching 170,000, significantly higher than the market expectation of 135,000. Moreover, this month’s unemployment rate fell from last month’s 4.187 to this month’s 4.152. In contrast, the US economy seems to be improving. What is going on here?
From the analysis, the biggest contributor to this employment increase is the healthcare service industry, while the manufacturing sector that the president is so eager about only accounts for 8% of the US job market. For the sake of this 8% of jobs, the whole world has been in turmoil, and yet the number of manufacturing jobs is still slightly declining.
What is most puzzling in the entire data set is the government employment numbers. Currently, there are tens of thousands of layoffs every month, but this month’s non-farm employment only decreased by 9,000. The main reason is that statistically, anyone who is considered to have left the government and is receiving severance pay is counted as employed. Therefore, this employment report greatly obscures the true employment situation in the current US market.
In any case, the capital market has already believed it. Yesterday, US stocks continued to rise sharply, achieving a nine-day winning streak and recovering all losses since the trade war. The next piece of bad news is that because this non-farm payroll data is too good, the probability of a rate cut in June has dropped from over sixty percent to around forty percent, meaning it is highly likely that there will not be a rate cut in June.
If the Federal Reserve does not cut rates in June and the economy is not stimulated, then it is very likely that the supply shortages and rising prices due to tariffs in May and June will push the US economy into the shadow of recession. The current US stock market is likely overly optimistic, with the index breaking through to a new high, but mainstream altcoins are not following suit. If next week does not produce a strong bullish trend, it will form a short-term peak, and if it fails to rise, it will fall. Everyone must be cautious.
After the long holiday, on May 8, the Federal Reserve will hold a key meeting to discuss interest rates. Under the pressure of the president's threats and inducements for a rate cut, can Powell maintain the independence of the Federal Reserve and once again give the market a hawkish warning against a rate cut? We will wait and see.
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