Major United States indexes saw substantial losses on Friday after the Bureau of Labor Statistics released an especially weak jobs report. Meanwhile, a few economists speculated that the unemployment surge could be partly attributed to July’s Hurricane Beryl.
July Jobs Report: Nonfarm payrolls clocked in at 114,000 in July, substantially under the 175,000 consensus.
Meanwhile, the U.S. unemployment rate rose to 4.3%, a low number compared to historical rates of unemployment, but much higher than last July’s 3.5% mark.
The rise in unemployment triggered the Sahm rule, a recessionary indicator, setting up potential rate cuts from the Federal Reserve in September.
Hurricane Beryl: Hurricane Beryl made landfall in Texas in early July. The storm was initially a category one hurricane, disrupting power for over 2 million Texans. It was later downgraded to a tropical storm.
The BLS was unequivocal in saying that the hurricane did not contribute to July’s weak jobs number.
“Hurricane Beryl had no discernible effect on the national employment and unemployment data for July, and the response rates for the two surveys were within normal ranges,” the report reads. The frequently asked questions section of the report elaborated by saying that it is difficult to quantify the effect of extreme weather on payroll employment.
Some economists were skeptical.
“There’s reason to believe the surge in the unemployment rate reflected a temporary Hurricane Beryl effect. Exclude that, and the increase was much smaller,” Guy Berger, PhD posted on X while relaying a graph. “Unemployment due to permanent layoffs increased only modestly and is down since the fall.”
KPMG Chief Economist Diane Swonk had a similar reaction.
“The report said the Hurricane Beryl has little effect [on] the data. HOWEVER, the number of those out of due to bad weather soared to 461K, the worst July on record.”
New York Times economics reporter Ben Casselman contributed to the conversation by relaying weather-related unemployment data. July’s number was one of the highest since Hurricane Katrina.
“BLS says Hurricane Beryl had ‘no discernible effect’ on overall employment or unemployment. But you can see the storm’s effect deeper in the data. Nearly half a million people said they were employed but not at work due to bad weather. That’s the most since January.”
Jason Furman, a professor at Harvard and the former chair of the Council of Economic Advisers, begged to differ.
“It’s possible Hurricane Beryl distorted these numbers. But I’m skeptical: BLS says it had ‘no discernible effect’. Regardless, Sahm rule is based on 3-month average. The jobs slowdown & revisions pre-date it. And all was worse than forecasts–and forecasts knew about Beryl,” Furman said.
The Forecast: Regardless of whether Hurricane Beryl directly contributed to the latest jobs report, increasingly extreme weather attributed to climate change can cause economic harm.
A 2024 National Bureau of Economic Research study estimated that by 2050, climate damages could amount to 10-20% of global GDP.
The 2024 hurricane season is shaping up to be particularly active, according to the NOAA. In May, the administration forecasted the formation of eight to 13 hurricanes, with four to seven expected to be severe.
One such storm is ongoing. According to the New York Times, a tropical system moved toward Florida on Friday with forecasts of heavy rain, gusty winds and possible flash flooding. Several parts of the state are expecting over 10 inches of rain in the next seven days.
On Thursday, Governor Ron DeSantis declared a state of emergency in more than 50 counties, including Orange and Osceola. Travel could be disrupted for visitors to Walt Disney Co‘s DIS Disney World and Comcast Corp‘s CMCSA Universal Studios.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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