Applications for jobless benefits increased by 78,000 for the week ending November 10, bringing the total to 439,000, up from 361,000, the Labor Department announced on Thursday.
This is the highest it has been in 18 months.
The four-week moving average, a “less volatile” figure, increased by 11,750, bringing the total to 383,750, up from 372,000.
“The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending November 3, an increase of 0.1 percentage point from the prior week's revised rate,” the Labor Department report added.
The surge in unemployment claims is being blamed on Superstorm Sandy.
“Superstorm Sandy pushes US jobless claims to 439K,” reads one Associated Press headline.
“Sandy Spurs Jump in Jobless Claims; Inflation Nudges Up,” reads one CNBC headline.
Now, to be fair, Superstorm Sandy did close many businesses along the east coast. And for each business closed, whether permanently or temporarily, its employees are entitled to unemployment benefits. So the narrative this morning from many media outlets is that Sandy closed a lot of businesses and that’s why unemployment applications are at an 18-year high.
However, according to Bloomberg, there's more to this story:
The Labor Department spokesman did not name the affected states, citing agency policy not to single out any one area. Today’s report showed a loss of electricity prevented New York offices from taking claims two weeks ago.
In addition, since Monday was a government holiday, three states and territories -- Hawaii, Oregon and Puerto Rico -- didn’t report claims data, causing the Labor Department to estimate their totals, the spokesman said. Two others, California and Virginia, provided their own estimates.
California provided its own estimates? Oregon didn't even turn in their numbers? Seems legit.
Furthermore, according to the Labor Department's press release, the two states with the largest increases in initial claims were Ohio (+6,450), which experienced some of the effects of Sandy, and Pennsylvania (+7,766).
Are these numbers to be blamed on Sandy as well?
“What is truly amusing is that the same Wall Street ‘experts’ who set expectations were unable to foresee the Sandy effect that every ‘macrotourist’ on Twitter apparently is so very aware of,” Zero Hedge writes.
“Also, it is apparently also ‘Sandy's fault’ (now that the Bush excuse is back in retirement) that the prior week's claims were revised from 355K to 361K. Basically, just as we said 3 weeks ago, ignore every negative data point: it is Sandy's fault,” the report adds.
Final Thought: Remember when Sandy first hit and all those analysts were saying that this would be a good thing for the economy? They claimed that money spent repairing the damage would boost GDP.
They also said that the storm would definitely result in layoffs.
So here's the thing: Disregarding the fact that this is also known as the “broken window” fallacy, how does a natural disaster resulting in an exponential jump in jobless benefits “boost” the economy? That is, how does a multibillion-dollar superstorm directly responsible for thousands of people collecting government checks increase economic growth?
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Front page photo courtesy the AP. Carousel image courtesy shutterstock.com This story has been updated.