Many people lost their jobs because of hurricanes Milton and Helene, which killed many people. The storms may have caused prices to rise, but they probably won’t stop the U.S. economy from growing much.
Before Hurricane Helene hit at the end of September and destroyed parts of the southeast U.S., the gross domestic product was on track to grow by 3% year over year in the third quarter. GDP is the official measure of how well the U.S. economy is doing.
There was no change in GDP growth because of Hurricane Helene, which hit in the last few days of the third quarter. Eastern Tennessee and western North Carolina were hit the hardest, but they are not heavily populated economic hubs.
Hurricane Milton, on the other hand, hit land on Oct. 9, early in the fourth quarter, and destroyed one of the country’s biggest and most populous states.
Helene caused a lot of rain in Florida, but not as many deaths as in other states. For a few days, Florida’s economy was almost completely shut down.
Economists say it’s still too early to tell how much Milton hurts fourth-quarter GDP, if at all.
“The data will be affected in a clear way,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, N.C., which is less than two hours from the western part of North Carolina that was struck by heavy damage. “At this point, no one really knows.”
Wall Street DJIA 0.97% traders even say it’s possible that the storms could help GDP a little.
That’s because GDP doesn’t account for the loss of things like companies and homes that are destroyed. It only keeps track of things that are made.
Economists say that a lot of money was spent getting ready for the storms. And even more money from the government and private people will be used to rebuild. On Friday, President Joe Biden said that Milton could cause about $50 billion in damage.
Eugenio Aleman, chief economist at Raymond James in St. Petersburg, Fla., said, “These events sometimes have a positive effect in the sense of economic activity.” “What is being built is what GDP measures.”
Aleman has lived through several storms, and he just got his power back. He said that a lot of people in Florida still haven’t gone back to work. He said that the most noticeable change will be in the weekly and monthly numbers for cuts and new jobs.
A short-term rise in inflation is another thing that could go wrong.
Storms on the East Coast have slightly slowed down the shipping of goods. Prices could go up for some goods, like new cars, if people rush to replace their damaged cars.
Of course, big storms don’t always destroy GDP numbers. The only ones that really hurt the business are the ones that do the most damage, like Hurricane Katrina in 2005.
In 2006, the Congressional Budget Office and the president’s Council of Economic Advisors said that Katrina hit the GDP and cut it by 0.5 to 0.7 percentage points.
Almost 1,400 people died in Katrina, and hundreds of thousands more were out of work for months. A major port was also shut down, and the U.S. oil and gas business was severely hurt.
Even though Helene and Milton were very bad, they did not cause as much damage as Katrina.
Before the end of January, the first number on fourth-quarter GDP will be made public. However, experts say they will have a better idea of the storms’ effects in the coming weeks.
