Hi! I'm Psy. According to the U.S. Bureau of Labor Statistics, the unemployment rate rose 0.2 percentage points to 4.3% in July from the previous month, the highest since October 2021, exceeding expectations of 4.1%. Wage inflation continued to cool, with hourly wages rising 0.2% month-on-month in July, slightly lower than the expected and previous value of 0.3%, and up 3.6% year-on-year, lower than the expected 3.7% and the previous value of 3.9%. Last night's heavy news also caused the entire crypto market to fall. Sam's Law has even been triggered, and the U.S. economy has entered a recession.
What is Sahm's Rule? Sahm's Rule is a recession prediction indicator proposed by former Federal Reserve economist Claudia Sahm. The rule focuses on the changes in the U.S. unemployment rate and uses this as a basis to determine whether the U.S. economy is likely to fall into recession. Sahm's Rule states that when the three-month moving average of the U.S. unemployment rate rises by more than 0.5 percentage points relative to the lowest point in the past 12 months, a recession may begin. The "three-month moving average" here refers to the average value obtained by adding the unemployment rates of the last three months and dividing by 3. It is used to smooth the fluctuations in the monthly unemployment rate data in order to more accurately capture changes in economic trends.
The core of Sam's Law is to predict economic recessions through changes in the unemployment rate. During economic booms, the unemployment rate is usually low and remains relatively stable. However, when the economy begins to decline, companies tend to reduce hiring or even lay off employees, leading to rising unemployment. Sam's Law captures this trend change by calculating the three-month moving average of the unemployment rate and comparing it to the lowest point in the past 12 months.
Sam's Law has shown high accuracy in past recessions. The law has successfully issued early warning signals in many recessions since the 1970s. For example, in both the 1973 and 2008-2009 recessions, real-time indicators of Sam's Law rose significantly and exceeded the 0.5% threshold.
In the context of the US economic recession, the interest rate cut in September may be imminent. As participants in the crypto market, we should understand that with the possible depreciation of the US dollar in the future, cryptocurrencies may become safe-haven assets in the long term. Compared with traditional gold, Bitcoin can be a better investment tool in some cases. Including the impact of the US election, the US government seems to be more willing to buy Bitcoin in the future, making it a better financial derivative.
Of course, the release of non-agricultural data last night caused a sharp drop in the crypto market in a short period of time. Bird Uncle believes that now is the best time to increase Bitcoin positions. In the coming period, Bitcoin will exert its greatest potential. The crypto market has a promising future. #美国7月非农就业增长放缓 $BTC