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Katrina boosts jobless claims

Hurricane Katrina refugees Patrick Bryant, left, and his girlfriend Demetra Crayton, back to camera, attend a job fair as they look to relocate, at Arizona Veterans Memorial Coliseum on Thursday in Phoenix. 
 (Associated Press / The Spokesman-Review)
Hurricane Katrina refugees Patrick Bryant, left, and his girlfriend Demetra Crayton, back to camera, attend a job fair as they look to relocate, at Arizona Veterans Memorial Coliseum on Thursday in Phoenix. (Associated Press / The Spokesman-Review)
Associated Press

WASHINGTON — An estimated 10,000 workers who lost their jobs because of Hurricane Katrina filed for unemployment benefits last week, the first wave of what likely will be hundreds of thousands of displaced workers seeking benefits.

The Labor Department said Thursday that the 10,000 figure was an estimate of the number of disaster-related claims based on spot checks with claims offices in Louisiana, Mississippi, Alabama and neighboring states such as Texas who have agreed to accept benefit applications from workers who have relocated from the hurricane areas.

Overall, a total of 319,000 newly laid off workers filed for claims last week, a slight drop of 1,000 from the previous week.

However, department analysts cautioned that that the big-picture figure would have been higher except for the fact that many claims offices in the path of the hurricane were shut down. They predicted the number of disaster-related claims will rise sharply in coming week.

Private economists agreed with that assessment and said that last week’s total is likely to be revised higher as well once the government collects more complete data on benefit filings last week.

“We know that a flood of Katrina-related claims is coming,” said Stephen Stanley, chief economist at RBS Greenwich Capital. “The magnitude and the timing are uncertain but the figures will clearly be boosted sharply very soon.”

In other economic news, the Federal Reserve reported that Americans increased their borrowing by $4.39 billion in July, a slowdown after a $14.55 billion increase in debt in June, which had been the biggest increase in eight months.

The increase in consumer credit represented a 2.4 percent advance at an annual rate and pushed total consumer debt in the categories surveyed by the Fed to $2.16 trillion. The July increase reflected a 4.8 percent rise in revolving debt, which includes auto loans, and a 1.5 percent drop in revolving credit, the category that includes credit card debt.

The government had previously reported that Americans’ personal savings rate dipped to a record low of negative 0.6 percent in July, meaning that they dipped into savings or added to their borrowing to finance their purchases in July. Sales of autos soared during the month as Americans took advantage of attractive sales incentives.

The Labor Department on Thursday announced $30.8 million in grants to Alabama, Louisiana, Mississippi and Texas to expand their ability to process claims for unemployment benefits as well as to speed up the payment of benefits to people who found themselves out of work because of Katrina.

The money will help “expedite unemployment insurance payments through mobile field units, hiring temporary staff, increasing Internet and telephone claims processing and rebuilding damaged facilities,” said Labor Secretary Elaine Chao.

Meanwhile, the Bush administration announced that it was dispatching three Cabinet members and the head of the Social Security Administration to the Gulf Coast on Friday to help get the word out about government benefits storm victims can receive.

Chao, Treasury Secretary John Snow, Commerce Secretary Carlos Gutierrez and Social Security Commissioner Jo Anne Barnhart will be making stops in Houston, Baton Rouge, La., and Mobile, Ala.

The Congressional Budget Office on Wednesday forecast a total of 400,000 lost jobs in coming months as a result of what is expected to be the costliest natural disaster in U.S. history. That would mean that the 600,000 to 800,000 payroll jobs that the economy was expected to create from September through December will be cut by half or more.

Economists will be closely watching the department’s weekly jobless claims report for any signs that the impact on employment from Katrina could become even more serious.

The concern is that consumers, who account for two-thirds of total economic growth, could suddenly reduce their spending because of the rising cost of gasoline and other energy products. In such an event, the drag on the economy could be larger than is currently being forecast.

In one sign that economic worries are rising, eight in 10 Americans in a new poll released Thursday by the Pew Research Center said they are concerned that the devastation from Katrina will cause a nationwide recession.

Almost half of those polled, 46 percent, said they are very concerned about an economic downturn.

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