How Will Hurricane Ian Affect the Economy?
Hurricane Ian has devastated parts of Florida and the human toll is still rising. The hurricane is also set to be one of the costliest in the country.
Ian is expected to be one of the top 10 costliest storms in the country’s history, with costs estimated between $70 billion to $120 billion in economic damage, Bloomberg reported.
While these estimates are still preliminary, Greg Daco, chief economist at EY-Parthenon, said Ian could lower Florida’s economic output by “about 6 percentage points in the third quarter and shave three-tenths off U.S. GDP,” according to Barron’s.
“The hurricane is expected to severely disrupt economic activity over 10 days, with power cuts, flight cancellations, suspension of energy production, impact on farms agricultural crops, in particular oranges,” Daco said.
Daco added, however, that “generally, natural disasters don’t have structural effects on economic activity. What’s been destroyed eventually gets rebuilt or gets transformed,” according to The Wall Street Journal.
While natural disasters tend to have temporary economic consequences, “activity is slowly made up in subsequent years when federal disaster assistance and insurance payouts allow for rebuilding,” The Wall Street Journal noted.
Meanwhile, CoreLogic assessed that wind losses for residential and commercial properties in Florida are expected to be between $22 billion and $32 billion, while insured storm surge losses in Florida are expected to be an additional $6 billion to $15 billion, according to a Sept. 30 analysis.
“This is the costliest Florida storm since Hurricane Andrew made landfall in 1992 and a record number of homes and properties were lost due to Hurricane Ian’s intense and destructive characteristics,” Tom Larsen, Associate Vice President, Hazard & Risk Management, CoreLogic, said in a press release. “Hurricane Ian will forever change the real estate industry and city infrastructure. Insurers will go into bankruptcy, homeowners will be forced into delinquency and insurance will become less accessible in regions like Florida.”
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