In the aftermath of Hurricane Harvey’s trek through South Texas into Louisiana last week, initial jobless claims shot up to nearly 300,000. Economists had anticipated another increase – albeit a modest one – this week in the wake of Hurricane Irma.
Irma, at one time a Category 5 hurricane that weakened to a Category 2 as it traveled along the west coast of Florida, didn’t pack as much of a punch as expected when it made landfall last weekend, but it was not unreasonable to expect it to have a similar effect to Harvey as the monster cyclone, downgraded by that time to a tropical storm, made its way up Florida into Georgia.
But a funny thing happened. Initial jobless claims went down for the week ending Sept. 9 – by 14,000 – the Labor Department reported Thursday, suggesting the economy is more durable than had been believed. Economists anticipated a small increase, from 298,000 (a 2½-year high) last week to 300,000 this week. Instead the number remained below 300,000, the generally accepted threshold for a healthy economy,
In Texas, a drop in filings of nearly 12,000 followed last week’s surge of more than 50,000.
“This is great validation of a burgeoning jobs market,” said John Engle, president of Illinois-based Almington Capital. “It's weathered a punishing pair of hurricanes and is bouncing back fast. Provided the response and rebuilding is managed well, this storm should represent no more than a blip on the economic radar.”
John Boyd Jr., principal of New Jersey-based The Boyd Co. Inc., a location consultant, warned of a delayed reaction.
“With the evacuations taking place last week in Florida, the Southeast and the Gulf Coast, many out-of-work people were not focused on filling out jobless claims,” he said. “They were busy evacuating, displaced into shelters or hunkering down in their homes without electricity. In fact, as of today, roughly 6 million people in five states remain without power.”
Once those immediate issues have eased, Boyd said attention will shift to other concerns.
“The flooding and storm damage caused by Hurricanes Harvey and Irma will cause signifcant job losses in the Southeast and in the Gulf Coast,” he said. “I expect those job losses to begin to show in next week's jobless claims report.”
In spite of the drop in claims, the four-week average of initial claims rose to its highest level in more than a year – 263,250.
“I do see tailwinds for a stronger fourth quarter,” Boyd said, “as rebuilding activity will be well underway and federal dollars into Florida and the Gulf Coast will begin to spur new development activity.”
