Despite the dismal situation brought about by two hurricanes on the United States, statistics report from the New York Federal Reserve on the nation’s gross domestic product (GDP), a primary indicator of a nation’s wealth, showed a 3.15% increase at an annual rate in the fourth quarter. While Republicans and Democrats are arguing on who can actually take credit on this largely positive report, economists say that the destruction wrought by the hurricanes Irma and Harvey actually played an integral role on this economic growth.
Think about it this way. The real estate market constitutes around 6% of the country’s GDP and with the loss and destruction of many buildings and infrastructures during the hurricanes, families had to rebuild or replace destroyed homes and properties thus increasing consumer spending and real estate market statistics. Homeowners either had to buy wood planks for construction, replace tattered furniture and broken fixtures, acquire new electronics or buy cars to replace those water-clogged ones. Food stocks also had to be resupplied. Unsalvageable clothes and other items also had to be replaced in due time. Consumer consumption is at an all-time high in order to replace or restore what was damaged or lost. And with personal consumption making up nearly 70% of United State’s economy, it’s no wonder US economy is roaring back.
This spending doesn’t only affect consumers but also businessmen and business owners who had to pour money on improving damaged infrastructures and companies. And now, many investments are placed on commercial real estate (i.e. construction of destroyed apartment buildings) thus affecting jobs, retail, and manufacturing. As we all know, construction requires an extensive need for manpower so employment rate is also high. High employment, according to Okun’s Rule of Thumb, is associated with the positive increase in GDP.
Furthermore, the increased need for new equipment and construction materials caused the moving and transportation department to boom as well. This department plays a vital role in the US economy as it does not only affect various economic sectors, generate revenue and employ a lot (millions) of citizens, but it also moves goods necessary in the upkeep of the country. If we add the catastrophic impact of Irma and Harvey on many states costing to around $150 to $200 billion of damage, it’s safe to say that movers and transporters will be very busy for quite a while. If any indication of this is true then look no further than data destruction and electronic recycling in Springfield, MO as this is a booming industry that hasn’t even been hit by the hurricanes, so we can only imagine how those can see a bounce back in those disaster stricken areas.
Freight trains will have to deliver logs, timber, steel frames, plywood, beams, concrete, plumbing and conveyor systems to various construction locations. Delivery trucks also have to transport furniture, electrical equipment, foodstuff and other goods to places severely affected by the catastrophe. Movers are also in high demand, especially those handling delicate instruments like San Diego, California piano movers. Add this to the fact that the Trump administration is very keen on rebuilding the country’s infrastructure in pursuit of more business opportunities. Trade is also picking up.
All in all, despite the lapses and loses from the previous years and the wreckage caused by Irma and Harvey, America’s economy is undeniably roaring back. If it’s sustained for the coming years, however, remains to be seen.