Hurricane Katrina's initial toll on the U.S. economy is beginning to add up, with a series of reports showing a jump in new claims for unemployment insurance benefits, plunging consumer confidence and lost industrial production.
The number of Katrina victims who have filed claims for unemployment insurance surged last week and appears headed higher as workers continue reporting storm-related job losses in seven states, the U.S. Labor Department reported yesterday.
There were 103,000 Katrina-related new jobless claims last week, pushing the total to 214,000, said department spokesman Subri Raman.
Most of those claims were filed by residents of Louisiana, Mississippi and Alabama. But the hurricane also was blamed for an unspecified number of new jobless claims filed last week in Georgia, Texas, Tennessee and Kentucky, the Labor Department said.
The total should climb in coming weeks by as much as 200,000 if the Congressional Budget Office was correct in estimating that the storm at least temporarily wiped out about 400,000 jobs.
State labor agencies also expect the numbers to keep rising, based on the crowds in their offices and the delays on their jammed telephone lines.
Conditions in Louisiana's job offices are "improving, but there are still some problems with the volume" of people trying to file claims, said Edward Pratt, spokesman for the state's Department of Labor. "We are encouraging people to be patient because we have so many people to deal with."
The state is urging its jobless residents, particularly those out of state, to file online, he said.
By Tuesday, 161,525 Louisiana residents had applied for unemployment insurance in the four weeks after Katrina hit. In comparison, 193,000 filed in all of 2004, Pratt said.
The U.S. Labor Department has provided a combined $30.8 million in federal grants to Alabama, Louisiana, Mississippi and Texas to expand their capacity to process jobless claims and speed the payment of unemployment benefits to hurricane victims.
The Labor Department also has extended the usual 30-day deadline for filing unemployment claims to Nov. 30 for workers left jobless by Katrina. And it has extended the deadline for providing proof of past employment and wages to 90 days from the usual 21 days after a claim is filed.
Separately, consumer sentiment plummeted after Hurricane Katrina to its lowest level since 1992 while expectations of higher inflation rose, according to a University of Michigan survey released last week.
The storm also sharply reduced companies' production of oil, gasoline, natural gas and industrial chemicals in the Gulf Coast region at the end of August, according to a Federal Reserve report released last week.
Fed officials said in a statement Tuesday that the storm should cause no more than a temporary setback to the economy.
Corporate chief executives largely shared the Fed's view, according to a survey last week by the Business Roundtable, an association of CEOs. However, the storm had prompted many companies to lower expectations for sales, hiring and investment in new plants and equipment in coming months.
"The wider impact of Hurricane Katrina on the national economy is now becoming evident and none of it is pretty," said Paul Ashworth, senior international economist for Capital Economics Ltd., in an analysis yesterday.
