Hurricane Ian made its way to Florida on Wednesday, September 28th, and has since caused immeasurable damage. The death toll has already reached nearly three dozen, and infrastructure damage has left hundreds of thousands across Florida, North Carolina, and South Carolina without power.
This photograph from Fort Myers in Florida shows two residents assessing the damage to boats at the marina. It makes up just a tiny fraction of the damage that Hurricane Ian has inflicted in not just Florida and the Carolinas, but also in the Caribbean including Cuba, Haiti, and other nations. The economic impact of Hurricane Ian is mainly concentrated in Florida, but has implications for the nation as a whole.
Due to the extent of the damage, economists predict that the hurricane has caused $25-$40 billion in damages, particularly from power outages, infrastructure damage, and other insured losses. As a result, EY-Parthenon’s Chief Economist predicts that this may cause a 6 percentage point decline in Florida’s output during the third quarter, leading to a 0.3 percentage point decline in nationwide growth. An interesting byproduct of hurricanes and other natural disasters is that while the destruction causes a short-term economic setback, a 2016 Census Bureau and BLS study found that within three years of the storm, earnings of those affected by the hurricane outpaced earnings of those who were not. This is due to the increase in demand for labor during the recovery period, where construction and maintenance workers in particular are in high demand.
One particular industry that may experience disproportionately high consequences of the hurricane is the Florida home insurance industry. Concerns over the high level of damage leave two fears dangling in the air: insurance companies unable to pay out claims or major hikes on insurance policy rates. Thirty insurance companies in Florida are in risky territory due to financial instability, and this recent disaster raises concerns that these companies may not be able to pay out the damage claims from the storm. State officials, such as state Senator Jeff Brandes, have predicted a potential 40% rise in insurance policy rates as a result of the storm.
As the storm escalates through the North Atlantic, it is inevitable that more infrastructure will be damaged and more lives will be put at risk. Federal and state governments will have to work together in a sweeping effort to provide relief to those affected and help get each and every community back on their feet after this major natural disaster.