Weekly jobless claims spike to highest level since September 2017

Jobless claims last week jumped to the highest level since the aftermath of Hurricane Harvey in 2017, according to Labor Department data released Thursday.

Roughly 253,000 Americans filed applications for unemployment benefits in the week ending Jan. 26, an increase of 53,000 from the previous week.

{mosads}The spike brought the weekly figures to their highest mark since Sept. 30, 2017, and drove the four-week moving average of unemployment filings to 220,250.

U.S. economic activity tends to slow down after the holiday season as consumers cut back on spending and employers shed seasonal workers. But the increase in jobless claims also came near the end of a record-long government shutdown that’s projected to cost the economy billions of dollars.

Jobless claims fell 13,000 to 199,000 for the week ending Jan. 19, but the number of federal employees applying for unemployment insurance jumped dramatically during that period. Federal civilian employees filed 25,419 initial jobless claims in the week ending Jan. 12, about 15,000 more than the previous week.

The nonpartisan Congressional Budget Office estimated this week that the 35-day partial shutdown cost the economy $11 billion, but projected that the U.S. economy will recoup all but $3 billion if the government remains open. Lawmakers face a Feb. 15 deadline to reach a spending agreement to keep the government open.

While $3 billion is about 0.02 percent of U.S. gross domestic product, the shutdown put a financial strain on hundreds of thousands of federal workers who missed two consecutive paychecks. Those employees are slated to receive back pay, but many government contractors who lost income during the spending standoff are unlikely to be compensated.

Federal Reserve Chairman Jerome Powell said Wednesday that the U.S. should rebound from the shutdown, but noted that the economy could take a long-term hit if another funding lapse causes “a loss of confidence in our ability to make policy in the United States.”