Perhaps the best way to describe hurricanes Harvey and Irma are as humanitarian disasters but economic boosts.
According to preliminary estimate from Moody’s analytics, hurricanes Harvey and Irma caused between $150 billion and $200 billion in damage to Texas and Florida, comparable to the costs from Hurricane Katrina in New Orleans in 2005. Harvey left at least 70 people dead and Irma sent millions of Floridians flying out of the state, but for those involved in the rebuilding process, there is more work than they could have ever dreamed of.
Mark Zandi, chief economist at Moody’s Analytics, estimates that rebuilding from the back-to-back storms will boost the U.S. economy in the fourth quarter of this year and into 2018.
Zandi’s conclusion aligns with many Wall Street analysts who forecast an “infrastructure stimulus” as a result of the storm’s rebuilding process.
“The long run effect of these disasters unfortunately is it actually lifts economic activity because you have to rebuild all the things that have been damaged by the storms,” said New York Fed president William Dudley.
As an example, consider just one sector of the damage – as many as 500,000 cars will have to be replaced.
However, a critical factor in determining the effect on the economy is how much insurance money and government aid flows to the impacted regions, and how quickly these funds get there. In the past, the combination of insurance money and government aid have roughly covered the full cost of the property damage and the lost economic output caused by natural disasters.
Another important factor is labor availability. Mounting labor shortages in Texas – especially for those in the construction and roofing industries – could be exasperated by the hurricanes.
However, Zandi still predicts most of the rebuilding, save to damaged public infrastructure, to be completed by the end of 2018.
This article is brought to you by ASAP Roofing, a national roofing company that specializes in hail damage, roofing restoration, and hurricane repair. ASAP has offices in Denver, Colorado, and Dallas, Texas.