As most of us know Houston was hit by hurricane Harvey and Florida is getting hit by Irma right now. What we do know is that there will be economic growth, but this doesn't correlate to economic well being.
Michael Feroli, an economist with JP Morgan had this to say "Here we should pause to emphasize the usual disclaimer: economic growth does not always correspond with economic well being." After a storm like this you can assume that demand for durable goods and home building supplies will increase as well as overall consumption. With all of this consumption GDP will rise. It is sad for all of the people that will lose investments such as their home and business however there is another side to it. Construction is about to experience a huge increase, companies will need to hire more workers which will increase jobs in the south which stimulates the economy as well.
https://finance.yahoo.com/news/full-economic-impact-irma-harvey-cant-known-wont-good-133300100.html
I find this particularly interesting because this could also be compared to the rebuilding period in post World War II in Europe. Europe's economic well being was in shambles, however, consumption of goods and services increased. Although most of these goods came from the United States, workers were still needed to rebuild the war torn nations.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThe entire hurricane situation is interesting because there are two sides to it. The economy will experience some type of growth from the increased demand in construction, durable and home goods, etc., but at the same time, economic activity will come to a halt for a time while the affected areas recover. Also, the government is about to see an increase in government spending. Taxes will slow down from the affected areas and we could start to increase the deficit.
ReplyDelete