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Last Updated: Thursday, 15 September 2005, 14:10 GMT 15:10 UK
US jobless growth at 10-year high
Sign offering work hanging outside a US toy department store
Before Katrina struck, the US economy was creating new jobs
US unemployment has surged in the wake of Hurricane Katrina, with the weekly rise in the number of people claiming benefits jumping to 10-year highs.

The US Labor Department said 71,000 people signed up for benefits last week - with 68,000 of those claims directly attributable to the effect of Katrina.

The increase is more than was seen after the 11 September terror attacks.

President George W Bush is expected to announce moves to help people affected by the hurricane later on Thursday.

Economic pressure

There have been calls for the limit to be extended on the time a person can claim unemployment benefit.

At present, they can sign up for a maximum of 26 weeks, but policymakers want that extended to 39 in order to ease the lives of those hit by Katrina.

The total number of claimants in the week ending 10 September was 398,000 - its highest level in two years.

The worry among economists is that the extra government spending will put increasing pressure on the US budget deficit at a time when it already is having to finance military operations in Iraq and Afghanistan.

After hitting record levels last year, the budget deficit has been trimmed but is still running at unsustainable levels.

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