🚨 US Unemployment Hits a 4-Year High — A Major Warning Signal
The latest US unemployment data just came in at 4.6%, slightly above expectations (4.5%) and the highest level since September 2021.
This is a serious development for the Federal Reserve.
📉 What the data is telling us:
The US labor market is now weaker than at any point in the last four years
Hiring momentum is slowing
Economic growth is losing strength
At the same time, inflation remains near 3%, still well above the Fed’s 2% target.
⚠️ This is the Fed’s worst possible setup — stagflation.
Slowing growth + rising unemployment + sticky inflation.
There are no easy options:
🔹 If the Fed keeps rates high:
A weakening labor market combined with restrictive rates increases the risk of recession and faster job losses.
🔹 If the Fed cuts rates too soon:
Inflation could reaccelerate — a mistake we’ve already seen after aggressive easing in 2020, which led to the 2021 inflation surge and forced sharp tightening in 2022.
This is why today’s unemployment data matters so much.
The Fed had broadly planned to avoid rate cuts in January, but this unexpected labor market weakness puts that stance under pressure.
📊 Ignore the data → recession risk rises
📊 React too fast → inflation risk returns
📚 A historical reminder:
In the 1970s, the US faced a similar mix of rising unemployment, high inflation, and stagnant growth. The Fed eventually crushed inflation with extreme rate hikes, but markets suffered — the S&P 500 delivered near-zero returns for a decade.
Today’s situation isn’t as extreme, but the risk pattern is familiar.
💡 What comes next?
Supporting growth first could trigger a short-term rally followed by a sharp correction
Fighting inflation first could cause a deeper downturn before a strong recovery
#BTC The Fed is unlikely to repeat 1970s-style tightening. More policy easing may come later.
#TrumpTariffs #RateCutExpectations