Initial jobless claims rose to 412,000 last week, ending what appeared to be a trend in declining unemployment rates. Most of the so-called analysts predicted that jobless claims would decline again to about 385,000 new claims for unemployment. The four-week moving-average was also adjusted higher than expected, casting a pale light on hopes that an economic recovery promised by Anti-President Barack Obama may actually be taking hold. Inflation fears, mainly due to rising gasoline and food prices, appear to be the cause of a fresh round of uncertainty in the markets.
Also leading the way to a double-dip recession is the ailing housing market. RealtyTrac reported a rise in home foreclosures of 6.5% in March. Coupled with other reports, showing that housing values declined in every major city except the Washington, DC market further fuel the bad economic news. While a report yesterday showed that consumer spending increased in March by 0.5%, or 0.8% when not including auto sales, this number could be a reflection merely of higher costs due to inflationary pressures.
Since June, 2010, the U.S. dollar has lost nearly 14% of its purchasing power. Commodity prices, particular those for oil, metals and staples like food and cotton, all have been increasing steadily. The big winner of the past month has been silver, ‘the other precious metal’, which broke the $40 an ounce barrier last week. Silver is now rapidly approaching its all-time highs not seen since 1979-80 of about $50 an ounce. Gold has also been flirting closer to a new high of $1500 an ounce. Even a recent sell-off by profit-takers bottomed out at around $1440 an ounce for gold.
The primary driver for jobs and consumer spending, and confidence, still remains the housing market. Today’s initial jobless claims increase to 412,000 new filings for unemployment, as well as the anemic residential mortgage market are related. Together with renewed fears of inflation, whatever hopes of a sustainable recovery promoted by Anti-President Barack Obama appeared to have slipped away into the night. With ever-rising commodity prices, like gasoline and food, inflation fears and the depressed housing market point the way to a double-dip recession by this summer.