Harvey and Irma Effect

It has not been a good couple of weeks for the United States and the Caribbean.  Harvey and Irma formed in the Gulf of Mexico and the Atlantic respectively, causing large-scale devastation in the region. It is expected to cost the US economy billions of dollars to fix the damage both hurricanes left behind. It will certainly leave a lasting effect on the economy and most importantly on millions of people’s lives.
 

Hurricane Harvey

Harvey was the first storm to hit the United States on August 25. When it hit Port Aransas and Port O’Conner near Corpus Christi with winds around 130 mph (209 km/h), the category 4 hurricane left more than 250,000 people without power. On August 26, the hurricane moved on to Houston and caused major damage to Houston Harris County, leaving 25% to 30% of the county flooded. This is an area as big as both New York and Chicago combined.
As of September 5, Hurricane Harvey damaged more than 200,000 homes of which nearly 13,000 were destroyed completely. More than 500,000 people registered for assistance with the Federal Emergency Management Agency. Harvey is expected to be one of the costliest hurricanes to have ever hit the United States.
 

Five most destructive storms to hit United States

Hurricane Irma

Irma, a hurricane the size of France and one of the most powerful storms ever recorded in the Atlantic, first swept through Caribbean Islands, including Anguilla, British and US Virgin Islands, Puerto Rico, and Cuba. It destroyed much of the infrastructure in its path, killing at least 37 people and leaving thousands of people with food and water shortages.

The path of Hurricane Irma

Irma next hit the state of Florida in the United States, leaving more than 6 million people without power and killing at least four. With winds of over 185 mph (297 km/h) lasting for more than 30 hours, it was the first time in history that the continental US has been hit by two hurricanes category 4 or above in the same year.

Impact on the US economy

Both storms are expected to have a lasting effect on the US economy, with damage cost estimates rising to around $290 billion. “We believe the damage estimate from Irma to be about $100 billion, among the costliest hurricanes of all time. This amounts to 0.5 of a percentage point of the GDP of $19 trillion”, Dr Noel N Myers, the founder of AccuWeather has said. “We estimated that Hurricane Harvey is to be the costliest weather disaster in U.S. history at $190 billion or one full percentage point of the GDP. Together, AccuWeather predicts that these two disasters amount to 1.5 of a percentage point of the GDP, which will about equal and therefore counter the natural growth of the economy for the period of mid-August through the end of the fourth quarter,” Myers added.
US Jobless Claims increased this month by the most since November 2012 as thousands of Americans affected by the storms filed applications to collect benefits, according to the Labor Department. Initial Jobless Claims rose to 298,000, a 62,000 increase from the previous month.

US Jobless Claims

By: Klavs Valters
GO Markets