- The Washington Times - Friday, October 28, 2005

Job losses from Hurricanes Katrina and Rita have passed the half-million mark with further increases still to come from Wilma as the Gulf Coast storms continue to batter the economy.

Meanwhile, new-home prices declined in September, a possible indication that rising interest rates are starting to cool the red-hot housing market, and orders for big-ticket durable goods fell by a bigger-than-expected 2.1 percent.

The Labor Department reported yesterday that an additional 24,000 workers who lost jobs because of Katrina, which hit the Gulf Coast Aug. 29, and Rita, which struck Sept. 24, filed applications for unemployment benefits last week. That pushed the total in the past eight weeks to 502,000 hurricane-related claims.

The weekly job losses from Katrina and Rita peaked at 108,000 in mid-September and have been trending lower since that time. However, analysts said Hurricane Wilma, which hit Florida Monday, will likely bring a surge in jobless claims in coming weeks.

The 24,000 hurricane-related jobless claims last week were included in total jobless claims of 328,000. The overall figure was down from 356,000 jobless applications for the week ending Oct. 15.

Some analysts suggested that Wilma might have depressed claims last week in Florida, if people who had been laid off decided to evacuate in advance of the hurricane instead of going to their local unemployment office.

“They will show up in the numbers next week along with people pushed out of work by the storm,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics, a private consulting firm.

In other economic news, sales of new homes rebounded in September after a huge decline in August.

However, the median price of new homes sold last month fell by 5.7 percent, in another indication that the booming housing market may finally be slowing as mortgage rates continue to rise.

Freddie Mac said yesterday that its nationwide survey showed all types of mortgages were higher this week, with the 30-year fixed-rate mortgage rising to 6.15 percent, the highest rate in 15 months.

Analysts predicted that as rates continue to rise, both sales and home prices will back off from the record highs of earlier this year.

But they expect the declines to be gradual and not cause the same kind of economic havoc created by the bursting of the stock market tech bubble in 2000.

“Housing is at the mountaintop now and all roads lead down. It is just a question of how steeply down,” said Mark Zandi, chief economist at Economy.com.

“It will depend on how high mortgage rates go and how fast they go up.”

The Commerce report showed that new-home sales climbed 2.1 percent last month to a seasonally adjusted annual rate of 1.22 million units, but the median price fell 5.7 percent from the August level to $215,700.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide