Goldman Sachs Claims US Job Report Could Overstate Weakness; More Crypto Downturn Underway?

The US Bureau of Labor Statistics (BLS) will release an estimate of its jobs report from April 2023 to March 2024. This data is critical to the financial markets and could influence the prices of cryptocurrencies.

Some observers believe the upcoming BLS data will likely reveal a slower-than-expected job growth. However, Goldman Sachs advises caution, saying the data could overstate weakness, misleading investors.

SignalPlus Vol Commentary

According to the New York Fed's July survey on labor market expectations, the percentage of respondents concerned about losing their jobs in the next four months has increased from 3.9% last year to 4.4%...

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- SignalPlus (@SignalPlus_Web3) August 20, 2024

US Bureau of Labor Statistics Report Causes Concern

Trading platform SignalPlus shared details of a July survey on labor market expectations. The survey revealed that the percentage of respondents who fear losing their jobs within four months has increased from 3.9% to 4.4%.

According to the August 2 BLS report, the United States added an average of 154,000 jobs each month between April and July. This is 818,000 fewer jobs than previous estimates from March last year through March 2024. The unemployment rate rose to 4.3%, the highest since October 2022.

Following this weak job data, analysts from Morgan Stanley, SiganlPlus, and other firms expect the upcoming BLS job data to be weaker.

Morgan Stanley predicted an increased decline of payrolls to 600,000 through 12 months, significantly lower than the previous data. This means payrolls could be trimmed by 50,000 monthly over 12 months starting from March.

This estimate comes as the financial sector anticipates Wednesday's upcoming US job data. This weak nonfarm payroll report on August 2 triggered fear that a recession was imminent in the US.

Notably, weak job data could trigger market selloffs, signaling declining consumer spending and a rapidly cooling economy. Investors will start selling their assets for fear of a recession and future price declines.

However, Goldman Sachs thinks there's little reason to fear as the Labor Department's data could be erroneous, overestimated, and misleading. The analysts believe the new forecast of 818,000 downward revision is incorrect and likely overestimated the job weakness by 400,000 to 600,000.

This error is mainly because the report excluded employment data of illegal immigrants, a group that significantly contributes to overall job growth. Also, Goldman analysts are not overly concerned about the report. They say it is old news" and tracks unemployment data from several months back.

What Impact Will the US Financial Data Have on The Crypto Market?

Financial data often impacts prices in the crypto market since it reflects the economic situation.

The cooling of the US economy and declining jobs raise concerns about the possibility of a recession. Hence, investors will panic and start short-selling their assets, leading to further downturn.

BTC trades at $59,448, down 2.1% in the past 24 hours. Altcoins like ETH, BNB, and Solana also declined in the last 24 hours.

Crypto analyst Michael van de Poppe believes the crypto market is still indecisive after the big correction two weeks ago. While van de Poppe did not explicitly mention whether the next phase will be a bear or bull market, he noted that Bitcoin inflows were gaining momentum.

The markets are indecisive after the big correction two weeks ago.

What's next? Is this the start of the bear or bull market?

In this update, from a new studio, I'm talking about my strategies on the #Altcoin portfolio.

Watch here: https://t.co/uym9BBYnJS

- Michael van de Poppe (@CryptoMichNL) August 18, 2024

Remarkably, Bitcoin ETFs recorded inflows of $150 million in the first two days of this week compared to $30 million last week.

The analyst believes that interest and momentum are back in the crypto market. Therefore, he expects Bitcoin to rally and the altcoins to follow the positive trend.

#Bitcoin inflow is picking up serious momentum. Over the first two days of this week, the markets have seen an inflow of $150 million.

In the past week, the inflow was only $30 million.

The momentum and interest are back in the markets! pic.twitter.com/gEmUxkRTm3

- Michael van de Poppe (@CryptoMichNL) August 21, 2024

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