Water and wind damage from hurricanes Harvey and Irma could slow overall U.S. economic growth and might make Florida and Texas less competitive over the long term.
Diane Swonk, an economist with DS Economics, says Harvey and Irma could reduce U.S. economic growth in the third quarter to an annual rate of 1.8 percent, down from the 2.8 percent growth she had predicted before the hurricanes.
Rebuilding after hurricanes can produce a surge in economic growth, but Swonk says shortages of labor and material may preclude post-storm booms in Florida and Texas.
She told the Wall Street Journal that rebuilding in Florida and Texas will put “stress that we’ve never seen on an economy that already doesn’t have enough labor and doesn’t have enough materials.”
The unemployment rate in August was 4.2 percent in Texas and just 4 percent in Florida, limiting the number of workers available for post-storm rebuilding.
Moreover, reductions in manufacturing capacity that began before the financial crisis of 2008 have caused a shortage of construction materials.
Hurricane Irma has threatened Florida’s tourism industry, Swonk told the Journal, noting that now is when travelers typically start to plan trips for Thanksgiving.
Irma also is likely to hurt Florida’s agricultural economy. According to a spokesperson for the Florida Fruit & Vegetable Association, Irma destroyed up to 70 percent of the citrus crop in some parts of the state.
Heightened cncern about climate change could hamper the economies of both Florida and Texas in the long term, Swonk says, because companies consider climate change and the potential for severe storms and high insurance costs when they decide where to locate. [CNBC] — Mike Seemuth