The storms marked the first time in the history of record keeping that two Category 4 or higher hurricanes struck the U.S. mainland in the same year, AccuWeather said Monday. Various air and sea ports were forced to temporarily shut down, while the temporary closure at refineries in Texas caused a surge in fuel prices, both of which resulted in significant supply chain disruptions.
Hurricane Harvey’s impact on Texas resulted in the temporary closure of 16 refineries, which represent a total of 20-25 percent of total U.S. refinery capacity, Peter Sand, chief shipping analyst at the Baltic and International Maritime Council (BIMCO) said in a webinar on the shipping industry outlook last Monday. This drove up freight rates in the Atlantic basin significantly, and created a short-term benefit for both oil traders and ship owners, according to Sand.
“As refineries slowly come back online, states along the East Coast can expect gas prices to remain volatile,” AAA Spokesperson Jeanette Casselano said Monday. The national gas price stood at $2.66 per gallon as of Wednesday, according to AAA.
“We believe the damage estimate from Irma to be about $100 billion, among the costliest hurricanes of all time,” AccuWeather Founder, President and Chairman Dr. Joel Myers said in a press release Monday. “This amounts to 0.5 of a percentage point of the GDP of $19 trillion.
"We estimated that Hurricane Harvey is to be the costliest weather disaster in U.S. history at $190 billion or one full percentage point of the GDP,” he added. “Together, AccuWeather predicts these two disasters amount to 1.5 of a percentage point of the GDP, which will about equal and therefore counter the natural growth of the economy for the period of mid-August through the end of the fourth quarter.”
Meanwhile, Moody’s Analytics Chief Economist Mark Zandi said on Monday that although it was currently hard to tell, the two storms likely caused a combined $150 billion to $200 billion in damage across Texas and Florida.
Freight transportation analyst FTR said in an analysis released Wednesday, based off an assessment provided by Noel Perry, partner at FTR and senior economist for Truckstop.com, that Harvey and Irma will cost U.S. GDP about 0.5 percent points in the third quarter of 2017.
Overall, the two states collectively represent about 15 percent of the U.S. economy, and while the effects in Texas will largely be tank truck and railcar related, in Florida, it will be dry vans full of consumer goods and flatbeds full of wall board, FTR said.
Regardless of how much the two storms will end up costing the U.S. economy, it appears they will only have a short-term effect.
FTR Partner Steve Graham said in a blog post last Monday, prior to Irma even reaching the U.S., that GDP would take a small hit because of Harvey, but rebuilding from the storm would provide a boost in GDP for the fourth quarter and next year.
Although the two storms will weigh in on third quarter GDP, “the final impact will be small and temporary,” PNC Financial Services Group said in a report last week.
“Reconstruction in the wake of Irma, funded by insurance payouts and federal aid, will boost the state’s economy and hiring in late 2017 and early 2018,” the PNC report said. “Similar patterns have been seen with other natural disasters, such as Superstorm Sandy, Hurricane Andrew and the Northridge earthquake.”
With Hurricane Katrina, there was a permanent decline in population and employment in New Orleans, but the national impact was limited since the economic activity flowed to other parts of the country, the report explained.
“Despite this year’s hurricanes, the current U.S. economic expansion, now in its ninth year, will continue,” the report said. “The fundamentals for the U.S. economy remain sturdy, with solid job growth providing support to consumer spending, an expanding global economy, good corporate balance sheets and stable financial markets.”
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