Jobless claims surge after Katrina

[notiCIas]

Jobless claims surge after Katrina

The biggest jump in 10 years trounces estimates as the full effects of the hurricane are felt.

September 15, 2005: 9:45 AM EDT

NEW YORK (CNN/Money) - Hurricane Katrina caused the number of Americans filing for unemployment to surge last week, far exceeding an already high Wall Street estimate, according to a government report Thursday.

The Labor Department said 398,000 initial claims for jobless insurance were filed in the week ended Sept. 10, up from a revised 327,000 the week prior. Economists had expected 350,000 claims, according to Briefing.com.

The 71,000 increase is the biggest jump in ten years, while the total 398,000 number is the highest in two.

The spike was not entirely unexpected. The Labor Department said last week it expected to see a sharp rise as paperwork came in from those hit by Hurricane Katrina.

But an economist said the rise isn't too alarming because it's the result of a single, fairly localized incident.

"It doesn't tell you anything about the economy at this point," said Robert Brusca, chief economist at Fact and Opinion Economics, a Manhattan consultancy. "It just gives you some idea of the magnitude of the displacement in the affected area."

Brusca said the biggest jump in claims should have occurred this week and that next week also may see a bump up, but that claims may return to their normal range in a month.

Reuters quoted the Labor Department as saying at least 68,000 of those new claims were directly related to Hurricane Katrina, and the department said that number will most likely be revised upward next week as state workers make their way to distant relief shelters.

"Due to the unprecedented volume of claims filed in the affected areas and due to the unconventional methods used in filing, the numbers that are reported do not truly reflect the number of claims filed," a department analyst told Reuters.

Hurricane Katrina hit the Gulf Coast Aug. 29 and caused widespread devastation and flooding, forcing the evacuation of the entire city of New Orleans and leaving most of it underwater. Up to one million people are expected to have been displaced.