Saturday, August 30, 2008

Gustav threatens an already weak labor market

Gustav Dangerous Category 4 says the Weather Channel. Here is what the Census Bureau has to say about the US region where Gustav will hit:
- Over 11.5 million residents from Florida to Southern Texas may be affected by Gustav
- The storm’s 5-day track threatens 68,000 miles of Coastline.
- 20% of New Orleans is living in poverty and 17% of households have no access to a vehicle.
As the storm progresses, the Census Bureau will detail Emergency preparedness here (there is no mention of Gustav yet).

Gustav’s threat to halt domestic oil production is to blame for Friday’s losses in the US stock markets. At stake is 80% of the Gulf of Mexico’s oil and gas production and a surge in gas prices to $5/gallon if infrastructure takes a direct hit.

But also at risk are jobs and welfare. The economic slump has already created a very soft labor market, where 463,000 net-jobs have been shed since December 2007. If Gustav affects the 11.5 million residents (over 7% of the labor force), then initial claims are sure to spike above their already threatening level of 425,000 filed last week.

In the end, a hurricane the size of Katrina or Rita would likely throw this economy into a recession. Private domestic demand just can’t take another hit on gas prices and jobs. However, with the media’s penchant for reporting negative news, the worst-case scenario seems overly dire. But given that Gustav is now Category 4, we will just have to cross our fingers and hope that it dissipates before arriving at the US Coastline.

2 comments:

  1. Waiting with baited breath and an eye on the Weather Channel. Where is Jim Cantore? Also waiting to see what this hook move is that is forcast near the coast. Weirdest looking thing!

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  2. Hi!

    I liked this very strange, futuristic films, starring Sylvester Stallone,Wesley Snipes, and Sandra Bullock: See the Wiki link if you are interested http://en.wikipedia.org/wiki/Demolition_Man_(film). Sylvester and Wesley are frozen in 1996 and unfrozen in 2032. By that time, there is no crime, no emissions, no problems, until Wesley Snipes comes along. Kind of a funny film.

    According to Wiki, Demolition Man grossed $58 million at the box office ($88 million in current dollars). As of Aug. 8, the new Batman grossed over $400 million.

    Thanks for reading! R

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