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Jobless claims soar by 71,000

Katrina blamed for surge as more bad economic news looms

WASHINGTON -- Hurricane Katrina triggered the biggest one-week surge in jobless claims in nearly a decade, and analysts warn that's likely just the beginning of the bad economic news ahead as the nation starts paying for the most expensive natural disaster in US history.

Consumers, already feeling the pinch at the gas pump, should be braced for price hikes for various products and services.

Everything from food to furniture to shoes could start becoming more expensive as retailers pass on higher shipping costs to consumers.

''We are just starting to see the impact of Katrina. We are going to see awful inflation numbers, awful employment numbers and awful industrial production numbers for a few months," said Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm.

Gas prices were rising even before Katrina but they spiked immediately afterward because the storm caused widespread shutdowns of oil platforms, refineries and pipelines.

Hundreds of thousands of people are out of work in the region and the rebuilding effort is expected to take years and cost hundreds of billions of dollars.

The Labor Department reported yesterday that applications for unemployment benefits jumped by 71,000 last week, the biggest increase since the East Coast blizzard of 1996.

The government said 68,000 of those claims were hurricane-related and analysts predicted that number would climb higher in coming weeks as more laid-off workers get around to filing claims and state unemployment offices process a backlog of claims already filed.

In other bad economic news, Labor reported consumer inflation grew by 0.5 percent in August, after a similar jump in July. Both increases were driven by surging energy prices.

Economists said the September figure is likely to be worse, noting that gasoline reached its record high of more than $3 a gallon this month and other fuel prices increased as well.

On Wall Street, the Dow Jones industrial average posted a small gain of 13.85 points yesterday to close at 10,558.75.

The core inflation rate was up just 0.1 percent in August, the fifth straight month in which it has barely budged.

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