Hurricane Beryl Misunderstood: Unemployment Rates Surge Across 28 States, Fed Faces Pressure for Rate Cuts

More than half of U.S. states witnessed a rise in unemployment rates in July, indicating that the troubling weakness observed in the national employment report extends beyond the impact of Hurricane “Beryl.”

According to data released by the U.S. Bureau of Labor Statistics on Friday, Texas, struck by the storm at the beginning of July, saw a modest increase of just 0.1 percentage points in its unemployment rate to 4.1%, still below the national average. Concurrently, 27 other states and Washington D.C. also faced rising unemployment rates, with 10 states experiencing increases of at least 0.2 percentage points.

These statistics shed light on Hurricane “Beryl’s” influence on the July employment report, which triggered a global market downturn two weeks ago. While some economists attributed the weakest hiring pace since the pandemic and the highest unemployment rate in three years to the storm, the Bureau of Labor Statistics commented that the hurricane had “no clear impact” on the data.

The Bureau identified 13 states with significant month-over-month increases in unemployment rates for July, a list that omits Texas.

Furthermore, state-level nonfarm employment data suggests that “Beryl’s” impact might have been minimal. Texas reported a reduction of 14,500 jobs in July, following a drop of 9,100 jobs in June before the hurricane struck.

The state of the economy remains a key concern for voters, with presidential campaign efforts focusing on swing states that will determine the 2024 election’s outcome. In July, Michigan’s unemployment rate climbed by 0.3 percentage points to 4.4%, marking its highest level since 2022. Nevada also saw an increase of 0.2 percentage points to 5.4%, maintaining its position as one of the states with the highest unemployment rates. Arizona, Georgia, North Carolina, and Wisconsin recorded slight upticks in unemployment rates, while Pennsylvania’s rate stayed unchanged.

Minnesota’s unemployment rate rose by 0.3 percentage points to 3.2%, the home state of Vice President Kamala Harris’s running mate, Tim Walz.

U.S. Labor Department data noted a modest addition of 114,000 nonfarm jobs in July, significantly below market expectations. Additionally, the unemployment rate climbed to 4.3% in July, the highest since October 2021. The trend reflects underlying weaknesses in the labor market.

Given the dual impact of rising unemployment numbers and subdued job growth, if employment conditions continue tightening, it is probable that the Federal Reserve might consider rate cuts in September to stimulate the economy. Market expectations for an economic downturn or even a recession have grown, putting pressure on the Federal Reserve to act proactively. However, the Fed’s stance on the urgency of such measures remains cautious.

Continual increases in unemployment in the coming months will likely indicate a rising permanent unemployment rate, compelling the Federal Reserve to reconsider its monetary policy and possibly undertake more aggressive rate cuts.