The state of Florida’s economy is the fourth largest in the United States, with a gross state product (GSP) of $1.647 trillion as of 2024. If Florida were a sovereign nation (2024), it would rank as the world’s 15th largest economy by nominal GDP according to the International Monetary Fund, ahead of Spain and behind South Korea.
Given the state’s economic importance, Hurricane Milton could wreak short-term havoc on the US economy.
The storm – classified as a Category 5 as of Tuesday afternoon – is forecast to hit Tampa and its suburbs on Wednesday night, just two weeks after Hurricane Helene slammed into the region before moving into North Carolina and Tennessee.
The twin storms could distort October labor market data, curb consumer spending and economic growth in affected areas and raise food prices.
Hurricanes skew employment statistics
“The October jobs report is likely to be heavily impacted,” wrote Andrew Hollenhorst, chief economist at Citi.
That’s because the reporting period considered by the Bureau of Labor Statistics for the monthly jobs report is the employment period that includes the 12th of the month.
October 12th is a Saturday and will be counted as the last day of the employment period in the measurement. The Office counts as employees all persons who work at least one hour during the considered period. So at least some residents of the areas affected by the storms will be counted as working this week.
However, with residents evacuating the Tampa area, many more workers could be absent throughout the week. Employers across the region closed ahead of Milton’s expected arrival. Orlando-based Disney, Universal, SeaWorld, Busch Gardens and Legoland theme parks announced they are closing early Wednesday.
Helene’s hit to employment could range from “very small” to the loss of more than 100,000 jobs in October, JP Morgan’s Abel Reinhart told Barron’s. The October jobs report will be released on November 1, just before the November 5 election.
Any drop in national employment statistics should be temporary, however, and would not warrant a change in Federal Reserve policy as the central bank weighs further rate cuts at its November meeting, writes Ryan Sweet, chief economist for the USA in Oxford Economics.
Milton raises food and energy prices
Beyond the impact on the labor market, Milton could lead to an increase in the cost of goods, including food and energy prices. Chevron announced Monday that it has evacuated all personnel from the Blind Faith platform and shut down the facility in preparation for Milton. Production at Chevron’s other Gulf of Mexico rigs remains at normal levels.
Fruit prices could also be affected, as Florida accounts for 17% of the nation’s citrus production, with the center of the state to be hit the highest producing region.
When Hurricane Ian hit Southwest Florida in September 2022, damage to the state’s citrus crop was estimated at between $200 million and $400 million, according to the USDA. The agency estimated that losses attributable to Ian amounted to 42% of Florida’s total production.
“Price increases on some vegetables and fruits, such as oranges and tomatoes, could be seen at the grocery store within a few weeks,” Joel Myers, AccuWeather founder and executive chairman, told Barron’s.
The destructive course
Milton is poised to become “one of the nation’s most destructive and costliest hurricanes,” Myers said.
This is due, in part, to the expected track of the storm. A strike in the densely populated Tampa area could result in significant property damage and business losses and reduced spending. If Milton’s economic losses exceed $200 billion, Myers estimates that the back-to-back hurricanes could negatively impact third-quarter GDP.
Helene’s impact on statewide GDP could be about 1 percent, Reinhart estimates. The four states hardest hit by the storm, Florida, Georgia, North Carolina, and South Carolina, account for nearly 13% of US GDP, so Helene’s hit to annual GDP growth would be about 0.13 percentage units.
Source: ot.gr
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