Government Shutdown Helps Jobless Claims to 6-Month High
Thanks to a huge backlog of applications in California and the government shutdown, initial claims for unemployment benefits spiked in the week ended October 5, increasing by 66,000 to a seasonally adjusted 374,000 — a six-month high. To provide context, initial jobless claims only rose by 1,000 applications for the week ended September 28 to a seasonally adjusted 308,000, while initial claims dropped 5,000 for the week ended September 21 to a seasonally adjusted 305,000, a nearly six-year low. Economists expected claims to rise to just 310,000.
Of last week’s new claims, 15,000 were filed by nonfederal workers — employees of federal contractors, for example — affected by the partial government shutdown, according to an analyst from the Department of Labor. Claims filed by furloughed federal workers will be tallied in a separate category. Nevertheless, the government shutdown will continue to have an effect on the numbers. “Claims are likely to be distorted for some time,” Raymond James chief economist Scott Brown told Bloomberg. “Private firms are stepping back. Given all the uncertainty, they are unlikely to hire.”
The fact that the Bureau of Labor Statistics’s jobless claims data is the only government report being published during the government shutdown shows the importance of the those numbers to government economists and the Federal Reserve.