Photo: Boeing via Flickr
When initial claims comes tomorrow watch for the possibility of a big upside surprise due to the “other” budget crisis.Deutsche Bank:
Watch out for jobless claims ramifications from the “other” budget impasse. While the financial markets have focused on the debt ceiling debate in Congress, a much smaller budget impasse threatens to push jobless claims back above the key 400k threshold. The Federal Aviation Administration (FAA) is experiencing a partial shut-down due to a failure by Congress to approve short-term funding for the agency. In turn, as of July 23 approximately four thousand FAA employees were furloughed; and according to anecdotal reports, the suspension of FAA-funded airport construction projects is leading to tens of thousands of private contractors being idled, as well. According to House Minority Whip, Steny Hoyer, as many as 75k individuals could be impacted. The impact on claims will depend on how quickly individuals file for unemployment benefits, but over the next few weeks this disruption could push initial claims back toward 425k, or higher. Ordinarily, a development such as this might hold less traction among the labour market headlines, however, given the fragile state of the economy at present, it is of greater concern.