As Hurricane Milton barrels toward Florida, The Conference Board chief economist Dana Peterson joins Seana Smith and Brad Smith on the Morning Brief to discuss the potential impact of the Category 5 storm on the labor market and economic data ahead of the Federal Reserve’s November meeting. “When we look at the amount of money that hurricanes have caused from 1980 through 2023, damages were upwards of $2.6 trillion. That’s roughly $60 billion a year. So imagine as a share of GDP [gross domestic product], that’s like 0.2%, but it could potentially cut up to three tenths off of GDP after the event. However, a lot of that can potentially be offset by rebuilding, but nonetheless, it’s highly disruptive. And when we look at the storms that have been coming through, they’ve been impacting large swaths of the labor market.” Peterson says that the most affected labor market sectors are those that rely on infrastructure. “For example, ports being closed or bridges and roads being washed out, that affects transportation.” She notes, “While there’s downside there, there’s also potential upside certainly for grocers who people go and they buy food, and also home repair types of companies that provide the materials not only for preparation for the storm but also for after rebuilding.” The economist says that the storm’s economic impact can affect economic data in the near term. She outlines that “usually, you’ll see the impact within a month and consequently within the quarter. It also depends on where the hurricane lands and wherein a particular state the hurricane affects. “So if it’s in rural areas where there are or that are sparsely populated or, you know, in areas where there aren’t a lot of people or businesses, then the damages can be less so, as opposed to if it barrels through a major metropolitan area. So you’ll tend to see those effects certainly very immediately on the ground. And then it’ll show up in the data within the month or even a quarter.” Despite the potential impacts of recent storms on upcoming labor data, Peterson believes the Fed “could probably go 25 basis points again because they have been saying the labor market right now is solid… Heading into the meeting, the labor market is fine. Yes, we may see some impacts from the hurricane, but the Fed is certainly going to look through those impacts.”
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