Florence to Batter U.S. Data But Harm to Economy Likely Small
Bloomberg
By: Jeanna Smialek and Sho Chandra
. . . Here are some other economic indicators to watch:
Retail Sales, Consumer Spending
Based on consumer purchases that won’t be made as a result of the storm — such as canceled events and missed dinners out — Florence may have a $700 million net negative impact on the U.S. economy, not counting insurance losses, according to weather-analytics company Planalytics’ initial estimate.
“If you’re a mom-and-pop and you happen to be in harm’s way, this could be devastating,” said Evan Gold, executive vice president at Planalytics. Florence is “going to be big, and it’s going to be notable, but I’m not sure it’s going to be as big as others” such as Sandy.
Bloomberg Intelligence analysts reckon retailers’ sales of food, water, home-preparation items and cleanup supplies will rise both ahead of and immediately following the storm, but purchases of more discretionary items, including restaurant visits, apparel and home decor, are likely to diminish.
Automobile sales may be worth keeping an eye on: They took a hit in August 2017, then rebounded to a 12-year high in September as Americans replaced damaged vehicles.
This year, the hurricane’s effects are already being felt in the stock market, with shares of home-improvement retailers Lowe’s Cos. and Home Depot Inc. rising while insurance companies decline.
Jobs, Wages
Florence could affect millions of workers in the southeastern U.S., with North Carolina, South Carolina and Virginia forecast to be hit the hardest. According to the Labor Department, flood-zone counties in the states have more than 42,000 establishments employing 682,179 workers with a quarterly payroll of $7.4 billion.
After hurricanes Harvey and Irma last year, the initial reading on U.S. payrolls showed a decline of 33,000 workers in September, the first pullback since 2010. The tally has since been revised to a gain of 14,000 jobs, and net hiring rebounded to 271,000 in October 2017.
About 1.5 million people were unable to work due to bad weather during September 2017, a 21-year high, and restaurants and bars, an industry where most workers only get paid if they show up to work, were particularly hit. Wages may show some impact too: Last year, the hurricanes boosted utility workers’ overtime pay and kept people away from work in low-wage industries such as leisure and hospitality.
Factories, Housing
Industrial production is another indicator to watch. It declined in September 2017 before surging in October as output at oil refineries and petrochemical plants returned to normal operations following Harvey-related flooding in the Houston area.
New-home construction also is sensitive to the weather. Residential starts were initially reported as a decline in September last year after Harvey and Irma.