Storm dents economy

first_img Katrina ripped through parts of Louisiana, Mississippi and Alabama in late August, destroying businesses, homes and lives. The blow was compounded by Rita, which struck Sept. 24. Both hurricanes hobbled important oil and gas facilities along the Gulf Coast, pushing energy prices even higher. Federal Reserve Chairman Alan Greenspan says the Fed will be closely monitoring economic activity to assess the impact of the back-to-back hurricanes. Fallout from Katrina alone – viewed as the more catastrophic of the two hurricanes – doesn’t pose a “persistent threat” to the nation’s economic health, Greenspan and his colleagues concluded at their last meeting, Sept. 20. More worried about inflation worsening because of the hurricane, the Fed at that meeting boosted interest rates for an 11th time since June 2004. Economists predicted that Fed policy-makers will raise rates again at their next meeting, Nov. 1. With approval ratings near a low point, President George W. Bush, meanwhile, is feeling the sting of anxious consumers whose confidence has been rattled by high energy prices and economic uncertainties exacerbated by the natural disasters. The last time payrolls fell was May 2003, when the labor market was struggling to get back on its feet after being knocked by the 2001 recession. The drop in September was the largest since a decline of 54,000 jobs in April 2003. Collecting information for Friday’s report from the ravaged region was a Herculean task for the government. As more data become available, the employment picture could look worse, analysts cautioned. “We expected the worst but as yet, we have not gotten it. Of course, we should not jump to any conclusions. Finding who has a job and who doesn’t in the gulf region is not a simple task,” said Joel Naroff, president of Naroff Economic Advisors. Said the BLS’ Rones: “It is clear that Hurricane Katrina adversely affected labor market conditions in September. However, we cannot quantify precisely the overall effects of the disaster and its aftermath on the September employment and unemployment figures. We hope to get additional insight as more data becomes available.” Economists predict that October probably will be another weak month for employment but were hopeful the situation would improve after that as rebuilding unfolds. Especially heartening to economists was the good momentum in job growth before the double blow of the two hurricanes. The economy added 277,000 jobs in July and an additional 211,000 in August. Together that was 77,000 more jobs than previously estimated. The report also showed that in September: Retailers cut 88,000 jobs. Employment in leisure and hospitality fell by 80,000. Jobs in food services, which includes bars and restaurants, fell by 54,000. Factories eliminated 27,000 jobs, mostly reflecting the impact of a strike at Boeing. On a more positive note, employment in health care grew by 37,000, construction jobs increased by 23,000 and professional and business services employment went up by 52,000. Workers’ average weekly earnings rose to $545.27 in September, from $544.26 in August. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREThe top 10 theme park moments of 2019 “The U.S. job market was not as severely impacted by the hurricanes as initially feared; outside the affected region, it would appear that job growth remained fairly solid,” which helped temper overall job losses, said Stuart Hoffman, chief economist at PNC Financial Services Group. Before the report was released, economists were forecasting a loss of at least 150,000 jobs. The rise in the unemployment rate to 5.1 percent, the highest since May, matched economists’ expectations. “This indicates that the job market is holding together pretty well,” said Mark Zandi, chief economist at Excluding the disaster areas, employment would have increased “in line” with the more than 190,000 jobs generated each month over the past year, said Philip Rones, deputy commissioner of the Bureau of Labor Statistics. Job losses from Katrina were around 230,000 for the month, economists estimated. On Wall Street, the Dow Jones industrials edged up 5.21 points to close at 10,292.31. WASHINGTON – Hurricane Katrina bruised the economy in September, causing the first nationwide job loss in two years, but the damage wasn’t as awful as many had feared. Payrolls fell by 35,000, with jobs in retailing, lodging, bars, restaurants and leisure pursuits such as gambling all taking a hit. The unemployment rate climbed to 5.1 percent, from a four-year low of 4.9 percent in August. The snapshot, released by the Labor Department on Friday, provided the most extensive picture of the jobs climate in the aftermath of the deadly and destructive Katrina, the costliest natural disaster in U.S. history. The impact of the next hurricane, Rita, was “negligible” on the latest figures, the department said. To be sure, the loss of lives and livelihoods in the ravaged regions is devastating and will be long felt. But Friday’s report suggested that overall economic activity and national employment – which each showed stamina before the storms – will withstand the trauma and not thrust the economy into recession. last_img read more