- Unemployment claims have already climbed following Hurricane Helene.
- Additional disruptions from Hurricane Milton complicate the data collection for October's jobs report.
- The economy is a top issue for voters, with the labor market especially in the spotlight in the lead-up to the election.
Hurricanes continue to devastate communities across the Southern US, and the fallout is already reflected in the latest economic data.
As the election nears, it means Americans will have a murky picture of the economy, which consistently ranks as a top issue for voters.
It started with initial jobless claims data released by the Labor Department on Thursday, which surged far higher than expected in the first week of October, rising to 258,000 — a 33,000 increase from the week prior. This surge is likely due in part to jobs being affected by Hurricane Helene in Southeastern states like Florida and North Carolina.
Unemployment claims are a useful gauge of the labor market, as they are updated weekly and can offer an early sign of large-scale layoffs.
The impacts of Hurricane Helene and Hurricane Milton, the latter of which made landfall on Wednesday, will likely distort upcoming economic data, particularly the October jobs report set to come out just four days before election day.
The monthly jobs report is always a closely watched measure of the economy, but especially now as recent months have shown it cooling off. To stimulate hiring, the Federal Reserve began cutting interest rates in September, and the jobs report will strongly inform its path forward.
"In terms of Hurricane Helene, it is difficult to get a concrete estimate of the potential impact on October employment," Dante DeAntonio, Moody's Analytics labor economist, told Business Insider in a statement. "Next week's jobless claims data will provide better insight into the potential magnitude, but I wouldn't be surprised if the storm subtracted at least 50,000 from headline employment given the wide geographic area of impact."
With the election less than a month away, the economy is a focal point for voters, especially as consumers still hold largely negative views of the post-pandemic economic situation. Positive data is especially critical for Vice President Kamala Harris and President Joe Biden, as the economy has been a weak spot for the administration — the University of Michigan's Index of Consumer Sentiment showed that while people were feeling more positive in September than in August, their economic views remained weak.
The timing of the disruptions from the hurricanes is key
The Department of Labor will begin collecting data on Americans' employment statuses next week to inform the October jobs report. If people impacted by the hurricane are out of work and are continuing to experience disruptions to their businesses, the Bureau of Labor Statistics may mark them as unemployed.
That means that the next jobs report, which comes out in November, could be abnormally weak, given that it will use data on job disruptions that occurred during a natural disaster. The household survey, which will be used to find October's unemployment rate and other labor-market figures, will cover respondents' employment situations from October 6 to 12, a Bureau of Labor Statistics spokesperson told BI in a statement. Similarly, the establishment survey, which provides the headline job creation numbers, covers the pay period that includes the 12th.
The chaos from the storms could even affect data collection itself. Daniel Zhao, a lead economist at Glassdoor, told BI that "because Milton is hitting right when the reference week is for survey respondents, there are probably people who just can't respond to the survey because they're evacuated or they don't have access to the internet or power," adding that "October data will be particularly muddy and subject to more noise or greater revisions later down. "
DeAntonio said that the ongoing Boeing strike, which involves around 33,000 workers and could affect the aircraft giant's suppliers, may also have a major impact on job growth.
"Put together, that means that headline job gains could be reduced by as much as 100,000 in October because of one-time factors," DeAntonio said about Hurricane Helene and the Boeing workers on strike.
Despite the economy being at the forefront of voters' minds, an anomalously weak October jobs report might not be enough to shift how people will vote.
"I wouldn't expect these events to materially change how Americans view the economy before the election," DeAntonio said. "Strikes and severe storms routinely impact employment estimates, and the Bureau of Labor Statistics is typically proactive in communicating the magnitude of such events."
The Bureau of Labor Statistics is aware of potential disruptions to the data. For example, it noted in its release last week Hurricane Francine, which hit Louisiana in early September, "had no discernible effect" on the employment data it collected.
"For severe weather conditions to reduce employment estimates, employees must be off work without pay for the entire pay period," a Bureau of Labor Statistics spokesperson told BI. "Employees who receive pay for any part of the pay period, even 1 hour, are counted in the payroll employment figures."
Any effects from the hurricanes could lead to an October jobs report that shows a more pessimistic view of the economy than underlying conditions would suggest. Guy Berger, director of economic research at the Burning Glass Institute, told BI because of temporary disruptions from the hurricanes and strikes, "we're going to see a lot of noise in October jobs data that will obscure the more fundamental trend everyone is interested in: is the labor market still getting gradually cooler and weaker as it did earlier this year."
Issues with supply chains caused by the storms' devastation could increase inflation in the coming months, but that wouldn't start to be reflected in published data until mid-November when the new consumer price index data is released.