The financial markets are bracing for a turbulent Wednesday, with cryptocurrencies potentially in the crosshairs, as lesser-known U.S. economic data could paint a grim picture of the nation’s economic health. The U.S. Bureau of Labor Statistics (BLS) is set to release its preliminary estimate of benchmark revisions to the monthly nonfarm payrolls, covering April 2023 to March 2024. This report, which typically surfaces in the summer or fall, is expected to reveal slower job growth than previously reported, raising concerns about the state of the U.S. economy.
According to financial observers, the impending update may confirm that the job growth between April 2023 and March 2024 was weaker than initially estimated. SignalPlus, a tech firm specializing in democratizing crypto options, highlighted the potential impact of the revised job figures in its market update on Tuesday. “On Wednesday, the Federal Reserve will receive revised job growth figures, which may reveal that job growth from last year through early this year was weaker than previously estimated,” the company stated.
Investment banking giant Morgan Stanley has warned of a significant downward revision in payrolls, predicting a reduction of up to 600,000 jobs compared to current figures. This adjustment suggests that job growth was trimmed by an average of 50,000 jobs per month over the 12-month period. Such a large downward revision could reignite recession fears, prompting investors to retreat from riskier assets, including cryptocurrencies, and seek refuge in safer investments—a trend that was evident following the release of the July jobs report earlier this month.
However, not all experts agree on the severity of the anticipated revisions. Goldman Sachs has cautioned that the upcoming data could be misleading and might overstate the weakness in the labor market. The bank’s Economics Research team noted in a client note dated August 16 that while the BLS revision could reduce the monthly job growth rate to 165,000-200,000, they believe the “true” pace of employment growth during that period was likely closer to 200,000-240,000 jobs per month.
Goldman Sachs attributes this discrepancy to the methodology used in the data compilation, which relies on the Quarterly Census of Employment and Wages (QCEW). This approach draws insights from unemployment insurance records, which exclude illegal immigrants—a demographic that has significantly contributed to job growth in recent years. Therefore, the revised figures may not fully capture the strength of the U.S. labor market.
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After the release of the BLS data, market attention will shift to the minutes from the Federal Reserve’s July meeting, scheduled for release at 18:00 UTC. Investors will scrutinize these minutes for clues on the Fed’s future monetary policy, particularly whether the Federal Open Market Committee (FOMC) discussed a potential rate cut of 50 basis points in their upcoming September meeting.
Wednesday’s data could signal economic weakness and trigger a pullback in cryptocurrencies, experts urge caution in interpreting the numbers. The revisions may not fully reflect the underlying strength of the U.S. labor market, and the market’s reaction will hinge on how investors perceive the broader economic context.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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