Jobless claims Thursday should show a decline from the elevated levels of the last couple of weeks, but Friday's November jobs report could show the full brunt of Super Storm Sandy's impact.
"I think we're going to continue to see claims come down below the 400,000 mark and move toward the 380,000 range because we are getting through the Sandy effect," said Diane Swonk, chief economist at Mesirow Financial. Claims are reported at 8:30 a.m. ET.
Economists continued to pare back expectations for November's monthly employment report Wednesday, after ADP reported an increase of just 118,000 private payrolls, slightly less than expected and well behind October's 157,000.
"It's an economic artery and it's showing," said Swonk of the east coast region hit by Sandy.
She expects to see just 75,000 nonfarm payrolls were added in November, down from the 171,000 created in October. "There will definitely be collateral damage for public sector workers as well, but there will also be offset," she said. "You did have the offset of emergency workers coming into the area and working overtime."
The consensus of economists polled by Reuters shows 93,000 payrolls and an unchanged unemployment rate of 7.9 percent in November.
Barclays chief U.S. economist Dean Maki forecasts the economy created just 50,000 jobs in November. Maki said the timing of the survey week — November 12 — was at the height of Sandy's impact on weekly unemployment claims. Claims peaked at 451,000 post-Sandy, which slammed into the east coast at the end of October, leaving the worst damage in areas of New Jersey and New York.
But the Sandy impact is nothing like the impact economists say could come if the economy also gets hit by the "fiscal cliff." The cliff is the double whammy the economy would feel from a jump in taxes and automatic spending cuts, if Congress does not act.
Swonk said the impact could be double-digit unemployment within the first half of next year as companies, already lacking confidence, slash workers.
But if the cliff is avoided, the jobs trajectory should improve. There should be gains as early as December from the employees returning to work after Sandy and the post-storm rebuild.
"You won't recoup it all in the areas where you lost it," she said. For instance, there is an impact on the building materials industry, which would show up in shipping and other jobs in other parts of the country.