Superstorm Sandy left more than wreckage and debris. It left thousands out of work. The number of people seeking unemployment benefits last week shot up to an 18-month high as a result of the storm that devastated much of New England and many mid-Atlantic states.
According to the U.S. Department of Labor, there were 439,000 seasonally adjusted unemployment claims filed last week. That’s up by 78,000 from the previous week. It was the biggest one-week surge in new jobless claims since 2005 and was well above the 375,000 jobless claims forecast in a Reuters poll.
Many Left Jobless when Businesses Were Destroyed
As a result of the storm in late October, many were left out of work when their places of business were destroyed. The storm ravaged homes and businesses, annihilating buildings and leaving millions without power and public transportation for days. Those living in New York, New Jersey and Connecticut filed unemployment claims under the federal Disaster Unemployment Assistance program. It allows those who are unemployed as a direct result of the storm and who don’t otherwise qualify for unemployment to file claims.
Before the storm, weekly applications for unemployment had fluctuated between 360,000 and 390,000 since January. At the same time, about 157,000 jobs were being added each month. The good news is that jobs are being added nationwide, the Labor Department said. In October, 171,000 new jobs were added with stronger-than-estimated hiring in August and September, analysts said.
Retail Sales Fall; Christmas Spending May Rise
At the same time, retail sales in October sagged for the first time in three months. The storm is being blamed for lagging automobile sales as well as an overall loss of spending momentum into the fourth quarter. The U.S. Commerce Department said retail sales dipped 0.3 percent in October after a 1.3 percent increase from the previous month. Economists had only predicted a 0.2 percent decrease. Automobile sales were down 1.5 percent, clothing sales dipped 0.1 percent and the sales of building materials dropped 1.9 percent as a result of Sandy, experts said. Sales at gasoline stations went up 1.4 percent in October.
Analysts say the unemployment claims should drop as cleanup efforts continue, more businesses reopen and life gets back to normal. In New York alone, the total economic losses and damages could total $33 billion. Overall, the economic impact could teeter near $60 billion.
The storm, combined with the looming anxiety over big tax increases and spending cuts, has caused consumers to be more cautious, analysts said. With the so-called fiscal cliff yet to be resolved, many have been scaling back spending in anticipation of the January deadline. Even so, a recent Gallup poll suggested that Americans would spend an average of $764 on Christmas gifts, which is $50 more than last year and more than $100 over the 2008 and 2009 forecast levels.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
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- Luhby, T. (2012, November 5). Hurricane Sandy Victims Can Get Unemployment Help. CNNMoney. Retrieved from http://jobs.aol.com/articles/2012/11/05/hurricane-sandy-victims-can-get-unemployment-help/
- Lange, J. (2012, November 15). Jobless Claims Surge in Wake of Storm. Reuters. Retrieved from http://www.nytimes.com/reuters/2012/11/15/business/15reuters-usa-economy.html?ref=business&_r=0