Harrison: Jobless Claims Will Rise By 500,000 Over Next Month

Your Real Vision Daily Briefing for July 20, 2020

Ed and Ash examine why the current jobless claims may be significantly underreported.

  • Current jobless claims may be significantly underreported, and we may see a spike in job losses over the next month.
  • September and October usually see market volatility as people return from holiday and quarterly earnings come out; this year, bad news on the virus front could trigger a phase shift.
  • Gold is rallying and as long as the U.S. underperforms it will be good for gold.

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Actual jobless claims have been trending down since April, but last week we saw an uptick of over 100,000 claims, which may be a sign of what’s to come in the near future, Ed Harrison told Real Vision during today’s Daily Briefing.

Harrison said the numbers were coming down just as the reopening began causing a spike in cases; now there’s a rollback of the reopening in many places, and therefore we’re seeing an uptick in non-seasonally adjusted numbers.

This is happening just as the adjustment factor is going to go down, which will cause a massive spike in the seasonally adjusted numbers. Based on statistical scenarios he ran, Harrison said he expects to see jobless claims rise by 500,000 over the next month.

This huge increase will have a significant impact on how we think about the economy going forward, adding to sense of alarm as we end the summer, evictions increase, and enhanced unemployment benefits and mortgage protections expire.

Harrison said this will likely roil markets during the September/October time frame, which is typically a volatile period even where there isn’t a pandemic. The current market bubble may enter a phase shift at that time, he said.

As all of that plays out, gold is rallying and could reach a record high as investors look for a reliable store of wealth and a hedge against inflation and negative real interest rates.

Harrison addressed the talk that gold could take out its 2011 high of $1,921 maybe even break $2,000. “If the dollar is depreciating and the Fed is printing money, the combination is good for gold. There’s potentially a long way to run for gold from here,” he said.  

The caveat to that is if we have a liquidity crisis. Harrison said that if that happens, people will want their dollars, but as long as the U.S. underperforms it will be good for gold.