The US labor market is cooling rapidly, a timely blow that could force the Federal Reserve to loosen its finances and potentially put a floor on the price of bitcoin. .
Planned layoffs, job cuts that companies have announced but not yet executed, rose 205% to 108,435 in January, according to data tracked by global outplacement firm Challenger, Gray & Christmas. It is the highest reading since January 2009, months after Lehman Brothers collapsed and pushed the global economy into recession.
Year over year, announced cuts increased by 118%, indicating a sharp weakening of the labor market in the first year of Donald Trump’s second term as president. The tech industry announced 22,291 reductions, with Amazon (AMZN) making up the largest share, while United Parcel Service (UPS) announced 31,243 planned cuts.
Andy Challenger, workplace expert at Challenger, Gray & Christmas, called it a high number for January, in any case a seasonally weak month for hiring.
“This means that most of these plans were established by the end of 2025, indicating that employers are not as optimistic about the outlook for 2026,” Challenger said.
This data clashes with the monthly payroll report from the Bureau of Labor Statistics, which still paints a picture of a resilient labor market.
Private reports are increasingly becoming early warning signs, pointing to cracks forming in the face of official figures. Earlier this month, blockchain-based Truflation showed real-time inflation falling precipitously below 1%, even as the official CPI remains well above the Federal Reserve’s 2% target.
Taken together, these unofficial indicators suggest that the Federal Reserve will soon need to ease policy by reducing borrowing costs to support the economy. The possible easing could bode well for assets like bitcoin, which is now down almost 50% from its all-time high of more than $126,000.
This month, the Federal Reserve left the benchmark borrowing rate unchanged in the 3.5%-3.75% range, while flagging concerns about inflation. Analyst projections for what he will do next are all over the place.
JPMorgan expects the Federal Reserve to keep rates unchanged through this year and then raise them sometime in 2027, while other banks expect at least two 25 basis point rate cuts this year.
An economist who correctly predicted Japan’s fiscal problems expects Trump’s nominee for Federal Reserve chair, Kevin Warsh, to cut rates by 100 basis points before the midterm elections in November.
