Bitcoin and stocks face pressure as stagflationary data continues to emerge.

Weak Economic Data Fuels Stagflation Concerns, Sending Bitcoin and Stocks Lower

What was shaping up to be a positive day in the markets quickly turned sour after a series of economic reports raised fears of stagflation.

The ADP jobs report for April, released two days ahead of the government’s official data, revealed that only 62,000 private sector jobs were created, significantly missing expectations of 108,000 and well below the 147,000 jobs added in March. This marked the weakest job growth since July 2024.

Adding to the negative sentiment, the U.S. government’s first-quarter GDP estimate showed a contraction of 0.3%, falling short of the expected 0.2% growth. The weak GDP result was largely attributed to a surge in imports, as businesses anticipated tariffs and rushed to bring in goods early in the year. With imports outpacing exports, the trade imbalance alone shaved nearly 5% off GDP growth for the quarter. Additionally, the Trump administration’s DOGE policy contributed to government spending being a drag on the economy, marking the first such instance since 2022.

Inflation concerns also heightened, as the Core PCE price index, a key inflation metric, climbed by 3.5%, surpassing forecasts of a 3.1% increase. The elevated inflation rate added fuel to concerns of stagflation, with prices continuing to rise while economic growth stagnates.

As a result of these disappointing figures, U.S. stocks took a sharp hit, with the Nasdaq falling by 2% and the S&P 500 dropping 1.5%. Bitcoin mirrored the broader market’s decline, slipping by 1% to around $94,300, as investor sentiment soured in response to the mixed economic data and ongoing inflationary pressures.