Merk Investments: Jobless Claims

Initial jobless claims for the week ending 20 September jumped to 493K vs. a revised 461K (455K previous). The four-week moving average increased to 462K and continuing claims, which are released with a one-week lag advanced to 3.542mln. According to the Labor department, the unexpected increase in claims was partially attributed to the impact of the twin hurricanes in the Southeast that kept individuals in Texas and Louisiana out of work.

The overall trend in the data in both the weekly claims and continuing claims provides a fairly clear indication of a labor market experiencing increasing stress. Ahead of the September non-farm payrolls estimate where we expect to see a -105K print in payrolls and an increase to 6.2% in the unemployment, it is quite clear that the market is about to observe a very rough period ahead in personal consumption. Based on our assessment, the labor sector is in recession and the economy, if it is not already there, is soon to follow.

This report was prepared by Merk Investments LLC, and reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any investment product, nor provide investment advice. Merk Investments does not own any of the stocks mentioned; this is not an offer to buy or sell any security mentioned.

Merk Investments: Jobless Claims: Week Ending September 20