Friday, August 30, 2019

Hurricanes and Economic Data

by Calculated Risk on 8/30/2019 01:33:00 PM

For everyone in Florida - stay safe!

Frequently there is a temporary slowdown in several growth indicators following a large natural disaster.  And usually there is a pretty rapid bounce back following the disaster.

Hurricane Dorian might negatively impact Q3 GDP, and September auto sales and housing.

Since this coming week is not the BLS reference week (includes the 12th of the month), there will probably be limited impact on September employment.

The first economic indicator to be impacted by the hurricane will probably be weekly unemployment claims.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average.   Several events are labeled (9/11, Hurricanes Katrina, Sandy, Harvey and Irma, and the 2013 government shutdown).   The great recession is obvious.

  In 2017, weekly claims jumped from 238,000 to 293,000 following hurricane Harvey.

However, last year, following Hurricane Florence making landfall along the Carolina's coast as a category 1 hurricane, there was little impact on employment claims - despite significant rainfall and loss of life.

If Dorian makes landfall as a major hurricane, I expect some increase in weekly unemployment claims.

We might also see an impact on housing and auto sales in September.   These will not be indicators of a recession, and we should expect any impacted indicator to rebound fairly quickly.

Stay safe.