From Deseret News archives:
Jobless claims surge after Katrina
Consumers can expect to pay more for everything, not just gas
Consumers, already feeling the pinch at the gas pump, should be braced for price hikes for various products and services. Everything from food to furniture to shoes could start becoming more expensive as retailers pass on higher shipping costs to consumers.
"We are just starting to see the impact of Katrina. We are going to see awful inflation numbers, awful employment numbers and awful industrial production numbers for a few months," said Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm.
Gas prices were rising even before Katrina but they spiked immediately afterward because the storm caused widespread shutdowns of oil platforms, refineries and pipelines. Hundreds of thousands of people are out of work in the region and the rebuilding effort is expected to take years and cost hundreds of billions of dollars.
The Labor Department reported Thursday that applications for unemployment benefits jumped by 71,000 last week, the biggest increase since the East Coast blizzard of 1996.
In other bad economic news, the Labor Department reported consumer inflation grew by 0.5 percent in August, after a similar jump in July. Both increases were driven by surging energy prices.
Economists said the September figure is likely to be worse, noting that gasoline reached its record high of more than $3 a gallon this month and other fuel prices increased as well.
While gasoline prices have retreated a bit in recent days, pump prices for the first two weeks of September were up 30 percent from a month ago. Analysts said the increase could drive up the overall inflation number by as much as 0.8 percent in September, which would be the biggest one-month surge in 15 years.
Economists predicted that the so-called core rate of inflation, which excludes energy and food, would likely begin rising as well, reflecting that energy price pressures are beginning to spread to the rest of the economy.
So far, those increases have not shown up in the data. The core inflation rate was up just 0.1 percent in August, the fifth straight month in which it has barely budged.
Comments
Rick Griffin, left, of Maricopa Work Force Development, helps Hurricane Katrina evacuee Troy Felder, right, of New Orleans, in designing a resume during a job fair at Arizona Veterans Memorial. Felder is attempting to relocate to Arizona. A total of 68,000 Americans lost their jobs due to Hurricane Katrina and filed for unemployment benefits this past week.
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