What Do Unemployment Numbers and the Fed’s Interest Rate Drama Mean for Silicon Valley?

On Friday, the Bureau of Labor Statistics reported that the U.S. economy added 151,000 jobs in January, which was 39,000 fewer than what economists were expecting. At the same time, however, the unemployment rate dropped to 4.9 percent, meaning the U.S. is at “full employment.” Good news for the American economy, right?

Not necessarily.

Economists are reading whatever they want in the January job numbers, because a single jobs report doesn’t mean a whole lot. Some say that the figures show that the U.S. economy is fundamentally strong. Others, a smaller group, say that it means the Federal Reserve should keep on raising interest rates because of inflation concerns, despite the astonishingly strong dollar.

For Wall Street and Silicon Valley, the January jobs report is a snapshot that’s really only useful when viewed in context.

Jared Bernstein, former chief economist to Vice President Joe Biden and a senior fellow at the Center for Budget and Policy Priorities, has looked at how the January figures fit into the larger macroeconomic picture. He thinks that the Federal Reserve will “notice that there’s been a bit of a bump in wage growth and that … they may surprise us and not raise rates in March.”

“If you’re Google or Apple, they definitely have economists who are looking at these sorts of reports to get a better feel for the macroeconomy and what consumers are facing, as well as their competitive stance in drawing in the workers they need,” Bernstein said to Re/code in a phone interview. “From the perspective of tech companies, the job market looks healthy. A bit of wage growth that’s amplified by low inflation. But all the big tech companies have big overseas operations, and the strong dollar in weak overseas markets is what’s hurting them.”

But the plummeting price of oil — which is a surprisingly effective indicator of how the stock market is performing — and the highly volatile Chinese economy have induced a down period in the American stock market. And tech companies, ranging from Twitter and LinkedIn to previously “sure-bet” cloud software companies, are hurting especially bad.

Bernstein thinks that the strong dollar and “weakness in overseas markets” are legitimate “reasons to be jittery,” but “the job market isn’t really one of them right now, interestingly.”

Echoing what analyst Ed Yardeni told Re/code last week, Bernstein says that the strong dollar is mostly what Wall Street and Silicon Valley are crowing about. Because the global market is so weak, American exports are pricey and American companies are losing money when they reprice their overseas earnings in dollars.

“I don’t hear a lot of multinational companies saying ‘it’s fine with me, we have to live with a strong dollar,’” Bernstein added. “What I hear are a number of companies, like Apple, recognizing that the strong dollar makes their lives complicated in export channels (goods they sell abroad) and foreign earnings channels (money they make from overseas customers).”

If the Fed chooses to continue raising rates, venture capital firms and private equity giants like Fidelity Investments and BlackRock will take it as a sign to slow down their dealmaking. It is already a difficult funding climate for startups that aren’t named Uber or Airbnb raising cash, and even incremental increases in interest rates could make it a lot tougher on them.

Despite the cries from Wall Street, no one is seriously suggesting that the U.S. is headed toward a recession. But pressure is mounting on Yellen and the Fed to hold off on raising rates, and it seems the only people left shouting for the central bank to tighten credit are those who are always worried about an inflation spike.

“The inflation hawks don’t have a lot of evidence on their side of the story, but that doesn’t tend to stop them,” Bernstein quipped.

This article originally appeared on Recode.net.