WASHINGTON – First-time unemployment claims jumped 47 percent in Minnesota during the first week of the federal government shutdown, state officials said Thursday.
The sharp increase put the state well ahead of the nation, which saw a 21 percent increase from 308,000 to 374,000 applications between the weeks ended Sept. 28 and Oct. 5, according to the U.S. Labor Department.
About 2,000 of the 5,000 new applications in Minnesota came from employees “linked to federal government employment,” said Blake Chaffee, a spokesman for the Department of Employment and Economic Development.
“Something is to be expected” across the country as a result of the shutdown, said Russell Price, a senior economist at Minneapolis-based Ameriprise Financial. “The best thing is it’s temporary.”
Thursday’s state and federal numbers offered a hint of the economic hit an extended standoff could portend. The 5,000 initial applications in Minnesota were the largest number since the week ended July 13 and one of the 10 worst weeks of the calendar year. The 374,000 first filings by out-of-work Americans was the country’s largest since March.
The only good news was that roughly half of the nation’s 66,000 increase came from a computer backlog in California that finally got counted. Still, the prospect of increased unemployment in an already fragile American economy caused some concern.
“We still need to see some movement on the hiring side,” Price said.
National weekly rates for new unemployment claims ran below 374,000 for all but two weeks of this year. In the weeks before the shutdown, the numbers were trending lower, ranging from 294,000 to 311,000.
The current spike will not become “a change in employment dynamics,” Price said, if the government shutdown ends soon and the U.S. debt limit is raised in the next few weeks so the country can continue to make payments on money it has borrowed.
On Thursday, Treasury Secretary Jacob Lew told the Senate Finance Committee that a U.S. default would have ruinous economic implications for the country and the world. Lew echoed warnings by business trade groups representing many of Minnesota’s largest corporations. □