The US markets face a recessionary challenge: here’s what the numbers say

The US markets are navigating increasingly turbulent waters. As stocks and cryptocurrencies simultaneously lose ground, the true driver of this decline lies in economic fundamentals. Data from the United States tell a consistent story of structural weakening, and investors are finally pricing in this reality.

The American labor market shows structural cracks

The first warning sign comes from the employment sector. In January, the United States recorded over 100,000 job cuts. This is not an isolated figure: it represents the highest level of layoffs in January since 2009, the year the US economy faced the Great Recession.

Meanwhile, job openings according to JOLTS (Job Openings and Labor Turnover Survey) have surprised to the downside. New job opportunities have reached their lowest point since 2023, a time frame that highlights how the labor market is losing momentum significantly.

When hiring collapses and layoffs rise

This pattern represents a very specific divergence. Companies are simultaneously not hiring and laying off workers, a behavior that emerges when confidence in economic growth diminishes. The phenomenon is far from random: when business conditions deteriorate, firms seek to protect margins by cutting labor costs before facing more serious problems.

The consequence? A chain reaction: fewer hires and more layoffs mean less disposable income for households, which in turn curtails spending. When consumer spending slows down, US markets tend to suffer significantly, creating a self-reinforcing recession cycle.

The tech credit market under pressure

A second level of vulnerability emerges from the tech bond sector. A considerable portion of loans and bonds issued by the tech sector is facing increasing difficulties. This is not a marginal detail: the tech credit market has so far been one of the pillars of the post-pandemic recovery, and its weakening signals a depletion of the abundant liquidity that characterized recent years.

When risky assets like tech stocks start to wobble, investors tend to seek safety, generating a flow of capital into more defensive sectors. This movement amplifies the sell-off in more speculative segments, including US markets and the cryptocurrency landscape.

Why this environment demands attention

Taken individually, each of these signals could be interpreted as a temporary fluctuation. However, together, they paint a coherent picture of a potential recessionary phase developing. Labor market data, combined with stress in the credit market, suggest that US markets are reasonably repricing downside risk.

History teaches that when jobs disappear and credit tightens simultaneously, consumers cut back on spending, businesses reduce investments, and the economic cycle changes direction. If this scenario intensifies, expecting further corrections in US markets, both equities and cryptocurrencies, would not be unreasonable. Vigilance remains the most prudent strategy at this moment.