The Economic Impact of the 2017 Hurricanes
The Atlantic hurricane season runs from June 1 to November 30, and for the first time in 166 years of recordkeeping, three Category 4 hurricanes–Harvey, Irma, and Maria–made U.S. landfalls in the same year pummeling Texas and Florida while devastating Puerto Rico. Preliminary data suggests that the combined costs of Hurricanes Harvey and Irma alone may be on par with Hurricane Katrina, the most expensive disaster in U.S. history.
Beyond the human suffering the economic impact of the storm is immense. Texas is the nation’s 2nd largest state economy and Florida is the 4th. Together they contribute 14% of U.S. GDP. Property damage in these states from Harvey and Irma has been estimated from $150-$200 billion dollars, plus another $20-$30 billion dollars in lost economic output, similar to the cost of hurricane Katrina. In Puerto Rico property damage from hurricane Maria may be as high as $55 billion dollars, with $40 billion more in lost output.
Lost economic activity from the hurricanes is expected to cut into 3rd quarter U.S. GDP growth. Business disruption led to a net loss of 33,000 U.S. jobs in September. This was the first month-to-month job decline in 7 years.
Hurricane Harvey shut down at least 25% of the nation’s oil refining capacity, causing a spike in gas prices to a national average of $2.67 per gallon. A level not seen since August 2015. Prices stabilized by mid-September thanks to a record draw from the nation’s gasoline reserves but may remain higher for some time.
In Florida hurricane Irma destroyed 50%-70% of the citrus crop and damaged many small businesses in the tourist industry. In Puerto Rico, islanders are scrambling for basic necessities. Power outages in some areas are expected to last for months. Some officials suggest Puerto Rico’s economy may be set back decades.
On a national level GDP and Jobs may rebound relatively quickly but the 1-2-3 punch of Harvey, Irma, and Maria will strain already precarious Federal Programs. A $15.3 billion dollar emergency relief bill, signed in early September, was only the beginning. The White House has requested an additional $29 billion dollars in October.
Based on the experience of New Orleans, where infrastructure is still being rebuilt 12 years after Hurricane Katrina, Texas, Florida and Puerto Rico, face a long road back from the devastating hurricanes.
Sources and Disclosures
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|Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017.|