The financial repercussions stemming from hurricanes Helene and Milton are projected to reach approximately $80 billion, potentially resulting in a reduction of roughly 0.28% in the US gross domestic product over the upcoming two quarters. This insight is reported by Wells Fargo Investment Institute, emphasizing the significant economic toll these natural disasters could impose.
Both hurricanes are estimated to cause about $40 billion each in damages. However, it is essential to recognize that these estimates are subject to change as further assessments are conducted. Michael Taylor, the Investment Strategy Analyst at Wells Fargo, commented on the severity of these events, stating that "Helene and Milton were particularly devastating hurricanes from both a humanitarian and an economic perspective, given the short interval between them." Despite these losses, the overall US economy, which boasts a GDP of nearly $29 trillion, is expected to withstand the impact without severe detriment.
Data from the National Oceanic and Atmospheric Administration indicates that nations have incurred a staggering $2.6 trillion due to weather-related disasters from 1980 until August 2023. Historically, however, these calamities have had only a nominal effect on the growth trajectory of the US economy, according to Taylor.
Evaluating the financial implications of natural disasters can be quite intricate, as they incur both direct and indirect losses. Direct losses refer to damage to physical assets, whereas indirect losses pertain to diminished economic output, as described in the Wells Fargo report. Taylor asserted that "for the purposes of forecasting the potential impact of Helene and Milton on US growth, we believe more weight should be given to indirect losses rather than direct losses, which primarily affect wealth and net worth." Interestingly, the historical trend reveals that GDP growth has typically surged in the two quarters following a hurricane due to reconstruction activities.
A singular hurricane can generate around 90,000 jobs during recovery efforts, translating to an approximate $6.2 billion in labor income while contributing about $9.8 billion to GDP, as indicated in the research report. Furthermore, when considering broader economic effects through supply chains and consumer spending, the rebuilding process from one storm can indirectly support nearly 250,000 jobs, create $17.3 billion in labor income, and contribute over $30 billion to GDP.
While Taylor notes that Helene and Milton will likely “put a dent” in October's economic activities, he anticipates a subsequent recovery later this year. Moreover, it is expected that discretionary spending on larger ticket items may lag for a duration of six to nine months, as outlined in the report..