As the federal government remains in shutdown mode, official economic statistics continue to be lacking, including the all-important monthly nonfarm payrolls report, which plays an important role in setting the Federal Reserve’s monetary policy.
This has thus raised the status of certain less followed reports and at least one of them sends a major red signal for the labor market.
That would be the monthly job cuts report from outplacement firm Challenger, Gray & Christmas. October data released Thursday morning showed 153,074 layoffs last month, almost triple the number seen in October 2024 and the highest figure for an October dating back to 2003.
“This comes as AI adoption, reduced consumer and business spending, and rising costs are leading to belt-tightening and a hiring freeze,” Challenger said. “People who are laid off today have a harder time finding new positions quickly, which could make the job market even more flexible.”
Zooming out paints a similarly bleak picture, with year-to-date job losses now topping one million, up 65% from last year’s level and the highest amount since the Covid panic of 2020.
October’s hiring figure is similarly low, with just 372,520 hiring plans for the month, the fewest since Challenger began tracking this data in 2012.
The ball in the Fed’s court
Crypto markets continue to recover from last week’s hawkish Fed surprise, in which the central bank cut its key rate (as expected), but Chairman Jerome Powell used his press conference to suggest that market participants had made a big mistake in assuming another rate cut in December.
Since then, a number of Fed speakers have followed suit, and at least two have said that if it were up to them, they wouldn’t have even cut rates last week.
The news is surely one of the factors that sent crypto plunging over the past eight days, along with Bitcoin falling below $100,000 before its small rebound this morning to $103,000.
Certainly, inflation was among the Fed’s concerns, but the revitalized hawks also suggest that the jobs market is healthy and therefore does not need monetary stimulus. Powell also pointed out that the government shutdown and lack of official statistics mean the central bank is flying blind as it tries to decipher the economy.
It will be interesting to note the Fed’s reaction to today’s shocking Challenger data. For now, traditional markets are not waiting. The 10-year Treasury yield fell six basis points to 4.10% and the market-based odds of a December Fed cut rose to 69% from 60% earlier in the week.
