With a combined amount of destruction caused by hurricanes Irma and Harvey reaching upwards of $200 billion, it is hard to say when the damages will be repaired.
According to Moody’s Chief Mark Zandi, their $200 billion dollar estimate could potentially change as more information is gotten from the scenes of these natural disasters. There is a possibility that damages could reach another $20-$30 billion in lost economic output from the storms. Due to this, Moody’s took off a range of half a point to 2.5 points for its third quarter gross domestic product forecast.
The estimate by Moody’s accounts for both property damage as well as lost output. Considering these two factors, both these storms are economically on par with Hurricane Katrina. Individually, the cost of damages from Harvey were put at between $86 billion and $108 billion, while Irma’s estimates stand between $64 billion and $92 billion.
The expectations from Moody’s is that fourth-quarter growth will be boosted by rebuilding efforts from the two storms. Moody’s stated in a report that “the economic fallout from the storms critically depends on how much insurance money and government aid flows to the impacted regions, and how quickly these funds get there.”
Over the next few months, if not years, Zandi sees his expectations that the funding will come from a combination of government assistance as well as insurance payouts. This will hopefully equal the total economic costs of these two natural disasters.
One of the largest factors in figuring out the amount of economic impact they will have is how quickly the refining business in Houston as well as the tourism industry in Florida, can get back on their feet. One of the other main issues is that of labor constraints in a construction industry that is already seeing trouble.
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