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Politico...
Hurricane
Irene an economic blow or
boost?
By Josh Boak
8/28/11
The
power outages and shuttered
airports may stop the engines of commerce for several days, but
Hurricane Irene
might have provided some short-term economic stimulus as billions of
dollars
will likely be spent to repair the damage to the East Coast over the
weeken
Cumberland
Advisors Chairman David
Kotok saw the storm as likely jolting employment in construction, an
industry
paralyzed by the bursting of the real estate bubble in 2008.
“We
are now upping our estimate of
fourth-quarter GDP in the U.S. economy,” he said in an email Sunday.
“Billions
will be spent on rebuilding and recovery. That will put some people
back to
work, at least temporarily.”
Kotok
expects GDP growth — which
limped along at less than a percentage point for the first half of the
year —
to exceed 2 percent in the last three months of the year and
potentially reach
3 percent.
Mark
Merritt, president of
crisis-management consulting firm Witt Associates, said the hurricane
should
provide a bump in economic activity over the next few months.
“After
a disaster, there’s always a
definite short-term increase,” Merritt said. “There will be furniture
bought,
homes repaired, new carpet, new flooring, all the things affected by
flooding.”
Nonetheless,
Merritt noted that the
increase could be short-lived, as insurance and utility rates should
eventually
rise to cover the losses associated with the hurricane.
Embedded
within those projections are
questions about whether Congress and President Barack Obama can set
aside
recent hostilities to make sure there is sufficient cash for the
Federal
Emergency Management Agency’s disaster relief fund. After blizzards
struck last
winter and tornadoes this spring, the fund has less than $1 billion
available,
which means that Congress might have to approve supplemental
appropriations.
“Washington
may set aside the usual
destructive and divisive partisan political wrangling and act in the
interest
of the nation,” Kotok said. “That means there will be a flow of federal
financial assistance to the disaster areas. We also suspect there will
be a
rapid response rather than Katrina-type delays. FEMA lives under a
microscope
these days.”
Read
the rest of the story at Politico
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