Irma: US economy will quickly bounce back from hurricane, says Goldman Sachs

Goldman cut its estimate for third-quarter growth by 0.8 percentage point, but said it could drop by as much as 1 point, but said this will be made up for in the following months

Michelle Jamrisko
Monday 11 September 2017 10:01
Comments
As Hurricane Irma touched down in Florida, the firm had already adjusted its forecasts for gross domestic product growth amid a particularly intense US storm season
As Hurricane Irma touched down in Florida, the firm had already adjusted its forecasts for gross domestic product growth amid a particularly intense US storm season

What the hurricanes taketh away, they will more than giveth back to US economic growth, according to economists at Goldman Sachs.

As Hurricane Irma touched down in Florida, the firm had already adjusted its forecasts for gross domestic product growth amid a particularly intense US storm season that also saw Texas battered by Hurricane Harvey.

Goldman cut its estimate for third-quarter growth by 0.8 percentage point, but said it could drop by as much as 1 point. The next three quarters will get a boost from a recovery in consumption, inventories, housing and energy.

“Costly and broad-based natural disasters are associated with particularly large declines in economic activity, but also sharper subsequent rebounds,” the economists, led by Jan Hatzius, said in the 9 September note to clients.

For now, Goldman sees third-quarter growth coming in at 2 per cent. The slump will more than be made up by a cumulative 1 percentage-point gain in the fourth quarter and first half of next year. The US should enjoy 2.7 per cent growth in the final three months of this year, they estimate.

In an 8 September note, Bank of America economists estimated that Hurricane Harvey alone would reduce third-quarter GDP by 0.4 percentage point, to 2.5 per cent, and that rebuilding efforts might not add to output until early 2018.

Bloomberg

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in