United States: Hurricane Harvey’s initial impact on data

By Julien-Pierre Nouen le

CHART OF THE WEEK

Hurricane Harvey hit the Houston region of Texas on August 26th. It is estimated that Harvey has caused more damage than Sandy (2012) but less than Katrina (2005) and will cost around $100 billion. Greater Houston accounts for just under 3% of US GDP, which is considerably more than New Orleans (hit by Katrina) but three times less than New York (hit by Sandy). Weekly jobless claims are the first indicators of the impact that superstorms have on the economy. The effects of Hurricane Harvey seem comparable with those of Sandy and Katrina. Hurricane Irma, which has hit Florida, should also impact data.

OUR ANALYSIS

Natural disasters of this scale often have an initial negative short-term impact on the economy as a result of related damages and economic disruption in the affected area, followed by a recovery that generally starts within just a few weeks. Subsequently, the rebuilding effort can be a boost to business and the initial negative impact on GDP is replaced by faster growth in subsequent quarters. As shown in the graph above, weekly jobless claims take about two months to return to pre-hurricane levels. Although the impact of such disasters on upcoming economic data is unpredictable and hard to gauge, it should be temporary.

 

The opinion expressed above is dated 12th September 2017 and is liable to change.

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.

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