Its Thursday and that means we have unemployment data to look at. Today’s release covers information up to August 28th. The pandemic unemployment assistance ended earlier this month but the unemployment claims report is behind by several weeks. Today’s report shows that we still have over 12M on unemployment and over 9M of them are receiving the pandemic money.
We actually picked up over 396k workers on the pandemic assistance dole compared to the data from August 21st. In total almost 179k people were added to the unemployment benefits compared to a week previous. This isn’t too surprising. There are always fluctuations but the key to reviewing this data is the trend and the trend is still moving downward.
These are both the 1 year charts. When we zoom out to include the government shutdown of the economy back in March of 2020, we would see that initial claims are approximately 100k higher than the previous baseline and that continued claims are roughly 1M higher. There are still a lot of people that are unemployed but the picture is steadily getting better.
Some have contacted me with a warning that the vaccine mandate could lead to higher unemployment. While I think this could be a possibility, I also believe there is going to be a very big court battle over the mandate. This will take time to play out. DOL/OSHA haven’t even been able to create the rule to mandate vaccinations so lets not get ahead of ourselves.
In other economic news, retail sales data came out today that surprised the experts. The consensus view was that retail sales would drop 0.8%. They actually came in up 0.7%.
This caused the market to throw a tantrum. Everything across my screen was red except the dollar which had shot up. David over at Live Better Now had the right take on the situation.
Gold and silver dropped on better than expected retail sales. The mainstream thinking appears to be that this will allow the Fed to accelerate its plan to taper, which means a stronger dollar.
This is very confused logic. The only thing keeping consumer price inflation under some control (and remember it’s over 5% right now, which is roughly twice what the mainstream expected in 2021) is the economic slowdown due to coronavirus restrictions and payouts.
Strong consumer activity is a sign that people are starting to get back to spending the way they did before the Fed created $5 trillion out of thin air. That activity, if it persists, is going to push price inflation numbers even higher. This will be bullish for silver and gold.
This was an opportunity to buy across the board. If you missed it don’t despair, there will be future opportunities. As David discussed, the market is deeply confused right now. In time, the market will figure out that the taper doesn’t matter. Until then, expect a few of these days and have some dry powder in your account ready to take advantage.