U.S. initial jobless claims remain at elevated levels, even after factoring out the effect of Hurricanes Gustav in Louisiana and Hurricane Ike in Texas, the U.S. Labor Department announced Thursday.

U.S. initial jobless claims rose 1,000 to 497,000 for the week ended September 27 -- the highest level in seven years -- the Labor Department said. Without the hurricane-related claims, initial filings would have totaled about 439,000, the department said. Claims for the previous week were revised 3,000 higher to 496,000. Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 475,000.

Also, the 4-week moving average increased 11,500 to 474,000. Economists view the 4-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.

Economist Peter Dawson said "job losses continue to occur at a troubling rate, even after taking into consideration the act-of-nature events of Hurricanes Gustav and Ike."

"We have an economy whose fundamentals are definitely not sound. The housing sector remains in a severe slump, financial service layoffs and consolidation obviously will continue, and business investment is low," Dawson said. "Exports are about the only positive data point remaining for the economy, but that too may come under pressure if global growth slows."

Last week it was Hurricane Gustav, this week it's Hurricane Ike.

U.S. initial jobless claims jumped to their highest level in seven years, up 32,000 to 493,000 for the week ended September 20, as Hurricane Ike forced layoffs in Texas and Louisiana, the U.S. Labor Department announced Thursday.

The Labor Department said Hurricane Ike claims boosted the above total by about 50,000. Claims for the previous week were revised 16,000 higher to 461,000.

Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 445,000.

Also, the 4-week moving average increased 16,000 to 462,500. Economists view the 4-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.

Economist Peter Dawson said "job loss numbers continue to show a U.S. economy that's in anemic condition. The U.S. economy is most certainly in a recession and credit market stress will only worsen commerce conditions."

"We're addressing the financial crisis right now, which is paramount and has to be the order of the day for public officials," Dawson said. "Lawmakers attention must be focused on passing the U.S. Treasury's bailout bill to keep markets liquid, which is an urgent matter. But after that's in place lawmakers should turn their attention to fiscal stimulus. Many people whose jobs were interrupted by Hurricane Ike will be rehired, but many jobs lost in the financial sector will not come back, due to consolidation, and this will push unemployment higher."

Right now, the United States is dealing with the effects of storms -- financial and otherwise.

That was how one economist characterized this week's unemployment report, in which U.S. jobless claims jumped 10,000 to 455,000 for the week ended September 13, the U.S. Labor Department announced Thursday. Claims for the previous week were unrevised at 445,000.

However, the Labor Department cautioned that this week's report was skewed higher by claims filed by residents of Louisiana who were laid-off following Hurricane Gustav.

Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 440,000.

Also, the 4-week moving average increased 5,000 to 445,000. Economists view the 4-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.

Economist Peter Dawson said "job loss statistics continue to reveal a U.S. economy that's on the verge of recession or already in one."

"Given, the recent corporate bankruptcies and banking mergers, unemployment levels are expected to rise, both directly from job lay-offs from these firms, and from the decreased business their partners and clients will experience," Dawson said. "Also, with companies becoming more conservative with operations, it's going to become increasing difficult for these workers to find comparable employment in a normal period of time, something public policy leaders need to keep sight of."

The losses from Gustav are significant, but not nearly as bad as they could have been.

That's the early read regarding onshore / offshore property and infrastructure damaged caused by Hurricane Gustav, with losses pegged at $4 billion to $10 billion, according to estimates by Risk Management Solutions. In contrast, Hurricane Katrina in 2005 caused about $50 billion in damages.

Risk Management said losses from Gustav were lessened by the fact that the storm weakened, and hit the coastline as a Category 2 hurricane, and the fact that it came ashore about 70 miles southwest of New Orleans. Those factors, combined with better preparation by companies with vulnerable property in the area, will result in lower damages totals, Risk Management said.

However, RMS was quick to point out that the $4-10 billion damage total does not include loses from flooding in New Orleans that could occur in the days ahead.

Gustav: Little U.S. GDP impact

Economist David H. Wang, who runs U.S. GDP models each quarter, said Tuesday he expects "only a minimal U.S. GDP impact from Gustav."

"Of course human safety is the primary concern. But regarding regional GDP, the Southeast U.S. will incur a 0.1-0.3% GDP reduction in the third quarter from the hurricane, but the overall impact on U.S. GDP will be minimal," Wang said.

Gustav may have done some damage to oil rigs and refineries in the Gulf of Mexico. At this point, that harm seems to be very modest. As the storm passed, oil dropped almost $5 to $109.

In the past, a natural disaster that could disrupt supply, a negative signal from OPEC, or a political problem in an oil-producing nation would have caused an oil spike that might have lasted for weeks.

Gustav may be the most significant indication yet that the dynamics of the price of crude have substantially changed. There are only a few reasons that this could happen. One is that the drop of oil and government investigations have pushed speculators out of the market. It was never clear how large their role was in the run that took crude above $140, but if they have moved to the sidelines the chances that oil would drop are probably enhanced.

The other explanation is one of simple supply. Almost all evidence points to Americans driving less and airlines flying less. It appears that a slight slowing of the economies in China and India has decreased their use some as well. The Bush administration said it was prepared to increase supply out of the Strategic Oil Reserve if Gustav had hit production hard.

Odds are the global economy will continue to cool. If so, the recent changes in the dynamics of oil prices are likely to continue to take the cost of the commodity back toward $100.

Douglas A. McIntyre is an editor at 247wallst.com.

Consumer confidence hit a five month high, according to a Reuters/University of Michigan survey. However, for those hoping for a recovery, that good news comes with a lot of negative.

General consumer spending dipped, probably in no small part to a dip in personal income of 0.7% in July, according to recent numbers. Also up, price increases that have pushed inflation to a 17-year high that has eroded consumer buying power. Both of these work to negate any impact consumer confidence might have.

Also adding weight to the market are worries and uncertainties surrounding the effect hurricane Gustav will have on oil production, ending a long run of lowering oil prices. Expect higher gas prices.

With all these worries on people's minds, here are today's unofficial closing bell levels:

DJIA: 11,543.96 -171.22 (-1.46%)
NASDAQ: 2,367.52 -44.12 (-1.83%)
S&P 500: 1,287.23 -13.45 (-1.03%)
10-Year Bond: 3.81% +0.03 (0.79%)

Oil rose for a fourth straight day Thursday as Tropical Storm Gustav prepared to enter the Gulf of Mexico causing oil / natural gas companies to evaluate oil rigs in the area.

Oil rose above $120 a barrel earlier Thursday morning, but is now trading below that level. Oil has risen about $10 in a week on hurricane concerns and geopolitical tensions.

The other, major energy commodities also jumped Thursday morning on news of storm's likely track. Unleaded gasoline rose 6 cents to $3.12 per gallon, heating oil increased about 6 cents to $3.32 per gallon, and natural gas climbed 8 cents to $8.69 per million BTUs.

As of 8 a.m. EDT, Gustav was located about 70 miles east of Jamaica at 17.8N Latitude and 75.6W Longitude, moving west/southwest at 6 mph, with top wind speeds of 70 miles per hour, according to weather.com. Forecasters expect Gustav to track west/northwest, enter the Gulf of Mexico, strengthen to hurricane status, and strike the U.S mainland between Houston and the Florida Panhandle, with the most likely landfall being Louisiana.