As the 2024 hurricane season approaches, forecasts predict an unprecedented number of named storms. A research team led by University of Pennsylvania climate scientist Michael Mann predicted a range of 27 to 39 named storms, with a best guess of 33 – and the economic ramifications could be substantial. The following analysis uses IMPLAN to explore the potential impacts of U.S. storms on the U.S. GDP and employment landscape, considering both the damage costs and the economic stimulus provided by recovery efforts.
The Cost of a Single Storm
Hurricanes are notorious for their destructive power, with the National Oceanic and Atmospheric Administration (NOAA) estimating an average cost of $22.8 billion per hurricane. Beyond the immediate damages, the ripple effects on the economy are profound. Repair efforts from a single storm are projected to support around 90,000 jobs directly, contributing $6.2 billion in labor income and $9.8 billion to GDP.
When considering the broader economic impact through supply chains and household spending, the numbers become even more significant. Repairs from one hurricane can indirectly support nearly 248,000 jobs, generate $17.3 billion in labor income, and contribute $30.3 billion to GDP, with a total output of $62 billion. Essentially, for each dollar spent on hurricane repairs, an additional $1.72 is generated in the economy. These gains are distributed across various sectors, including maintenance and repair services, retail, housing, petroleum refining, and banking.
A Stormy Outlook: Predicted Economic Impact of the 2024 Season
Forecasts suggest 33 named storms this year, with an average of three hurricanes expected to make landfall in the United States. The economic implications of these storms are staggering. The combined repairs from these hurricanes could support over 700,000 jobs, generate $52 billion in labor income, and contribute
$90.8 billion to GDP. The total economic output from these activities could reach
$186.1 billion.
The Hidden Costs: Unemployment and Lost Income
Hurricanes not only cause physical destruction but also disrupt employment. Power outages and business shutdowns can lead to significant economic losses. On average, an unemployed American loses $1,634 per week, and the inability to spend due to unemployment can lead to a further $2,401 loss per person per week in economic output. For each dollar not earned, an additional 47 cents is lost to the broader economy.
Assuming 100,000 people are unable to work for just one week following a hurricane, the total loss in output could be around $240 million. These losses are particularly felt in sectors such as housing, healthcare, insurance, and food services, which are critical for community stability and recovery. Losses become even more widespread when we take into consideration the losses to the businesses that shut down.
The Dual Nature of Economic Impact
The economic impact of hurricanes is multifaceted. While the immediate aftermath brings significant costs and job losses, the recovery phase stimulates the economy through job creation and increased spending in various sectors. The data underscores the importance of robust recovery and support systems to mitigate these impacts and enhance economic resilience.
As we brace for a potentially record-breaking hurricane season, understanding these economic dynamics is crucial. Policymakers, businesses, and communities must be prepared to address both the immediate damages and the long-term economic implications. Effective disaster preparedness and responsive recovery efforts can help cushion the blow and harness the economic stimulus that follows in the wake of these powerful storms.
Looking Forward
The 2024 hurricane season poses a significant threat to the US economy, with an estimated $90.8 billion potential loss to GDP if three named storms hit the United States. However, the recovery efforts from these hurricanes also provide an opportunity to support job creation and economic growth. By preparing for both the immediate and extended impacts, we can better navigate the economic challenges posed by these natural disasters and strengthen our resilience against future storms.
Understanding the intricate balance between economic loss and recovery is vital for building a resilient economic strategy in the face of increasingly severe hurricane seasons.
Note: Some numbers in this blog have been updated to reflect revised calculations as of 11/15/2024.