The southeastern United States is grappling with the aftermath of Hurricane Helene, even as Hurricane Milton barrels towards Florida.
These consecutive disasters, occurring less than a fortnight apart, are poised to leave a lasting imprint on the economy, warned Raphael Bostic, President of the Atlanta Federal Reserve Bank, in the week commencing October 6.
According to Straight Arrow News, Bostic cautioned that the economic repercussions of the hurricane season could unfold over the next six months or more, warranting close monitoring by the Federal Reserve. As Hurricane Milton's trajectory becomes more certain, damage estimates fluctuate between tens of billions to over $100 billion. Moody's approximates private insured losses from Hurricane Helene to be in the vicinity of $8 billion to $14 billion.
"Hurricane Helene is by far the most impactful event of the current 2024 hurricane season thus far, though this may quickly change with Major Hurricane Milton due to impact Florida in the coming days," stated Mohsen Rahnama, Moody's Chief Risk Modeling Officer.
In the immediate aftermath of these natural disasters, Seth Harris, former Acting Deputy Labor Secretary, highlighted the potential impact on jobs and employment data. "The hurricane is going to have a substantial effect on numbers coming out of the entire Southeast. Were going to see a very large number of people who are temporarily laid off," Harris said. "Its hard to know exactly how long thats going to lastThe swath of the hurricane [Helene] was quite broad, and it hit a lot of population centers. So I think that is going to have a meaningful effect.
The hurricanes are also anticipated to trigger supply chain disruptions, particularly in the food, medicine, and gas sectors, as people scramble for supplies. The storms obstruct transportation routes, causing a bottleneck in the delivery of goods. Furthermore, Hurricane Milton threatens to damage major port infrastructure in Tampa, potentially disrupting national and international trade routes.
Chris Konstantinos, Chief Investment Strategist at RiverFront Investment Group, offered a nuanced perspective on the economic impact of such disasters. "When we think about a huge, horrific natural disaster with a huge human toll, we tend to focus solely on the negative sides of the economic impact and for obvious reasons," Konstantinos said. "The cold, hard economic fact is [there are] gives and takes of what happens after a catastrophe like this. There are often two sides of it.
Konstantinos also pointed out the potential economic stimulus resulting from these disasters. "Theres going to be a huge amount of infrastructure spend," he said. "And so for companies, industry sectors that are construction related, sometimes these things can actually be a huge stimulus of sorts in those areas. And that may, at least regionally, actually increase some of the manufacturing data that were seeing.
Despite the massive insured losses in the short term, Konstantinos suggested that insurance companies could potentially benefit from major storms in the long run, as they can secure rate hikes. This comes at a time when Florida already has the highest home insurance rates in the country, with homeowners shelling out an average of about $1,000 per month for coverage that excludes flood insurance.
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