The US is experiencing its longest period of job growth on record, clocking in at 83 months straight. GDP increased by a steady three percent annual rate in the second quarter and the outlook for this quarter is looking similar.
But this could change once the full extent of Hurricane Harvey is realised, forecasters predict between 0.3 and 1.3 percentage points could be shaved off third quarter gross domestic product growth.
It could become the second-most expensive natural disaster in US history. Most of the estimated 68-91 billion-euro cost is expected to hit southeast Texas, particularly Houston. But it’s also having an impact further afield.
Texas is heart of the US oil and gas industry. Refineries in the area and major pipelines have been shut down.
As such, motorists nationwide are seeing petrol prices rise, at least in the short term, and consumer spending is expected to drop slightly.
Exports could also dip following the temporary shutdown of Port Houston.
Moodys credit ratings agency expects costs to businesses to come to between eight and 13 billion euros, with additional infrastructure costs predicted to climb to just over eight billion.
The combined effect could slow down the US economy. Annually, the Houston region alone is responsible for over 420 billion euros in economic activity.
However, analysts estimate any drop resulting from the storm to be recovered later in 2017, meaning forecasters, such as Macroeconomic Advisers to predict a positive outcome in the long term. Rebuilding and the clean-up efforts are expected to prompt a boost in economic activity.
In the meantime, the White House has prepared a request to Congress for an initial recovery aid package of some five billion euros. Acting as a first down payment, it is hoped the money will ensure first recovery efforts run smoothly with sufficient funding.