With all the talk about Harvey and Irma, not much is being said about the impact these storms will have on the US economy. Disrupting big chunks of Texas and Florida -- as the storms have done and are doing -- will surely reduce the GDP figures for the third quarter. On top of that, the rise in gas prices due to Harvey will add to inflation. Meanwhile, since this coming week is the one during which the unemployment survey is done, we should see a jump in unemployment for September due to the temporary effects of Irma. Put all this together, and we are likely to see a batch of weak numbers come out in October. No doubt, the mainstream media will blame these numbers on a "failure" of President Trump's policies even though such a claim is without merit.
When we move forward into the fourth quarter, however, we should see a positive move on the economic front. It's sad to say, but all the work rebuilding in Texas and Florida means additional economic activity, higher employment and quicker growth of output. It has been estimated that something like one million cars were destroyed by Harvey, and we may see big numbers too from Irma. Adding the need for one and a half million cars will greatly reduce the inventories of car manufacturers and will also drive up the price of used cars. This should a major boost for companies like GM and Ford. Companies that make lumber, drywall and other building materials should also get major boosts in orders. Since much of Florida depends on service industries like tourism, it will not get the big rebound. Vacation dollars lost in the next few months while repairs are made do not get replaced to a great extent in the future. Putting it all together, though, there should be a big jump in economic activity in the fourth quarter.
When we move forward into the fourth quarter, however, we should see a positive move on the economic front. It's sad to say, but all the work rebuilding in Texas and Florida means additional economic activity, higher employment and quicker growth of output. It has been estimated that something like one million cars were destroyed by Harvey, and we may see big numbers too from Irma. Adding the need for one and a half million cars will greatly reduce the inventories of car manufacturers and will also drive up the price of used cars. This should a major boost for companies like GM and Ford. Companies that make lumber, drywall and other building materials should also get major boosts in orders. Since much of Florida depends on service industries like tourism, it will not get the big rebound. Vacation dollars lost in the next few months while repairs are made do not get replaced to a great extent in the future. Putting it all together, though, there should be a big jump in economic activity in the fourth quarter.
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