Non-Farm Payrolls Drop 23K: Warning Sign? Chen Feng-hsin Reveals America's Hidden Crisis — The Real Threat Is U.S. Debt, Not Interest Rates

According to data from the U.S. Bureau of Labor Statistics (BLS), non-farm employment in the United States decreased by 23,000 in July. The decline was primarily driven by local governments, the education sector, and retail. The weak non-farm payroll figures significantly lowered market expectations for a Federal Reserve (Fed) rate hike. In response, veteran media commentator Chen Feng-hsin analyzed the situation on her program 'East, West, North, South: Long Feng Pei,' stating that while the U.S. employment situation has not deteriorated, the issue of long-term government debt is becoming increasingly severe.

Chen noted that the market had initially expected non-farm employment to increase by 80,000, but instead, July saw a decline of 23,000—far below forecasts. Moreover, employment figures for May and June were revised downward by a combined 103,000, making the data particularly poor. However, this does not mean 'the U.S. labor market has collapsed.' The main drag on employment came from the government sector, which lost 53,000 jobs in one month. Additionally, after the conclusion of the FIFA World Cup, employment in leisure, entertainment, and retail sectors declined by a total of 59,000.

Chen analyzed that the slowdown in government, leisure, and retail employment is not a structural issue. The U.S. labor market remains balanced, as there have been no major fluctuations in layoffs or hiring. However, these figures highlight that 'America's debt problem is very serious.' The July non-farm payroll results reduced market expectations for a Fed rate hike. At the same time, despite falling employment and lower rate hike expectations, the yield on the U.S. 10-year Treasury note remains stubbornly high, closing at 4.70%.

Chen emphasized that U.S. Treasury Secretary Scott Bessent's joint intervention in the foreign exchange market with Japan aims to prevent Japan from selling U.S. Treasuries to stop the yen's depreciation. Additionally, the U.S. Treasury Department stated in its refinancing announcement that it will maintain the current scale of medium- and long-term Treasury auctions over the coming quarters.

Chen believes the Treasury's strategy of 'short-term debt as the main source, long-term debt as supplementary' puts U.S. debt in an unstable state because long-term bonds provide stable funding. However, the Treasury has no alternative—issuing more long-term debt would raise market concerns about oversupply. The decline in rate hike expectations, paradoxically, highlights the severity of America's long-term debt problem.