The US labor market is weakening. Does this have consequences for Bitcoin?

In March 2022, the US Federal Reserve launched its most aggressive interest rate hike campaign in history. As a result, almost everyone expected a recession sometime around the end of 2022 or in 2023, but this has not materialized for now due to strong American consumption and, as a result, the strong job market.

However, we are now seeing cracks beginning to appear in the American labor market. Will unemployment rise? And what does this mean for the Bitcoin price?

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The US labor market in graphics

In the first chart we see labor market sentiment (dark blue line) starting to decline. As soon as this increases, the mood prevails that it will become increasingly difficult to find a job. As you can see, in the past this has meant that unemployment will rise (green line).

“Jobs hard to get” minus “jobs plentiful” indicate an increase in the unemployment rate

What will we see next? The average American workweek is beginning to shrink in hours. This is usually a sign of a slowdown (see 2008, recession).Weaker demand for labor: average weekly working hours are declining

Wage growth for job hoppers is also falling, and that is usually a sign that the economy is doing less well. In this area we are still far from the level of recent years, but the decline is clearly visible.

Weaker labor demand: wage growth for job changers declines

The number of job vacancies has also fallen sharply in the USA…

Weaker demand for labor: Vacancies tend to decline

Additionally, growth in the number of workers has declined sharply since the Federal Reserve began raising interest rates in March 2022.

Source: BLS, Haver, Apollo Chief Economist

All charts are from BLS, Haver Analytics and Apollo Chief Economist.

What does this all mean for Bitcoin?

It would be fantastic for Bitcoin if the American economy could survive. A recession would not be good for the Bitcoin price in the short term and the digital currency is currently gaining tremendous momentum.

In this respect, we can only hope that the American labor market (and thus the economy) can hold its own, but we certainly cannot assume that at the moment.

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