Devastation in Florida from Ian: Death, Destruction, Darkness

At least 21 people died in Florida after Hurricane Ian made landfall Wednesday, according to Florida officials, who warned that the toll could rise.

Source: WSJ | Published on September 30, 2022

Hurricane insurance claims

According to Kevin Guthrie, director of the Florida Division of Emergency Management, the state confirmed one death in Polk County caused by the storm surge or rising water levels on Friday. During the storm, twenty people died in Charlotte and Collier counties, but officials were unsure whether their deaths were caused by high water levels or something unrelated to Ian.

Mr. Guthrie predicted that figure would rise as more counties were added to the death toll. He predicted that a number of fatalities would be reported in Lee County, where the storm made landfall, adding that a rescue diver discovered human remains in a home with water up to the roof.

Economists predict that Hurricane Ian will have a negative impact on US economic growth through the end of 2022. Aside from that, rebuilding and recovery will boost economic output in the coming years.

According to an early estimate by Fitch Ratings, the hurricane devastated fast-growing communities along Florida's southwest coast, causing insured losses ranging from $25 billion to $40 billion. Power outages, closed airports, and impassable roads will all slow the economy's recovery. More destruction is likely as the storm approaches Georgia and South Carolina in the coming days.

According to Greg Daco, chief economist at EY Parthenon, the storm could reduce Florida's economic output by about 6% in the third quarter. This will reduce national economic growth by about 0.3 percentage point from June to September and by about 0.

"I expect people to stop going to restaurants for a while," said Tatyana Deryugina, an economist at the University of Illinois Urbana-Champaign. "The nightlife in Tampa will probably not be the same, and some businesses may be forced to close." "On the other hand, there will be destroyed cars and destroyed housing that will need to be rebuilt, and people will go out and spend money, driving GDP up."

Many natural disasters, such as hurricanes, have relatively minor economic consequences in the long run, according to economists.

"In general, natural disasters have no structural effects on economic activity," said Mr. Daco. "What has been destroyed is eventually rebuilt or transformed."

This implies that the affected areas near Fort Myers or Tampa, which had been rapidly growing prior to the hurricane, will not sustain permanent damage.

In August, unemployment in both the Fort Myers and Tampa metropolitan areas was 2.7%, which was lower than the national rate. During the pandemic, both areas experienced a rapid influx of people. Since the beginning of 2021, Florida's economic growth has outpaced the national average in every quarter.

One advantage is that Florida is accustomed to and prepared for major storms. The state set aside $2 billion in May to assist insurance companies in dealing with claims.

According to Denise Rappmund, a senior analyst at Moody's Investors Service, this has helped stabilize borrowing costs for the state and its local governments, which should aid in reconstruction.

"From a credit standpoint, these issuers are generally able to withstand these natural disasters and come out OK," she said.

According to a Moody's report, the small Florida town of Mexico Beach recovered relatively quickly from Hurricane Michael in 2018. The storm destroyed approximately 1,600 homes in the town. According to the report, 160 properties had been sold a year later, and land prices had returned to pre-storm levels.

People who live in a hurricane's path may see their employment prospects improve in the long run as a result of the rebuilding effort.

According to a 2016 study conducted by economists at the U.S. Census Bureau and the Bureau of Labor Statistics, earnings of people affected by hurricanes outpaced those of those who were not affected within three years of the storm, which was likely due to higher labor demand during the reconstruction. According to the study, higher earnings more than offset income losses in the immediate aftermath of the storm in many cases.

Brigitte Roth Tran and Daniel Wilson of the Federal Reserve Bank of San Francisco discovered earlier this year that counties hit by natural disasters have higher per capita incomes after eight years than they would otherwise. They discovered that house prices have risen as well.

"Despite the enormous toll that disasters exact," they write, "local economies in the United States have generally recovered successfully in terms of income."