Hurricane Harvey could knock down US GDP growth: Goldman Sachs

Cornelia Mascio
Settembre 13, 2017

That's according to Goldman Sachs, which says economic growth could slow by nearly a full percentage point during the third quarter because of damage caused by Harvey and Irma.

Hurricane Harvey, potentially the costliest storm on record, may have taken a large bite out of USA economic growth in the third quarter, according to Goldman Sachs. Harvey brought record flooding to Houston and other areas in southeast Texas. Goldman Sachs cited negative impacts to housing, consumption and inventories as well.

They added: "Given potentially sizeable growth effects from Harvey - and with Irma risks now moving to center stage - we are lowering our Q3 GDP tracking estimate by 0.8pp to +2.0 percent".

However, the US economy should bounce back rather quickly, Goldman Sachs said. Goldman Sachs raised its economic growth forecasts for the next three quarters and said that would more than make up for what was lost. The bank noted that it lowered its third quarter growth projections for the USA economy by 0.8 percentage points to 2% but could see a further impact if damage figures were to escalate. Fourth-quarter GDP is now expected to jump 2.7%, followed by 2.5% and 2.4% growth in the first and second quarters of 2018.

Irma was described as a "major event" for the insurance industry, Munich Re board member told a conference in Monaco Sunday, but noted that his company is "not the most exposed" to the state's insurance market and the $20 billion to $30 billion costs he said the industry was likely to incur. Hurricane Katrina holds the current record with a $108 billion price tag.

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