Hurricane Florence To Impact The Economy

The biggest news on Tuesday was the potential for hurricane Florence to deliver catastrophic damage to North Carolina, South Carolina, and Virginia later this week. All those states along with Maryland and Washington D.C. are under states of emergency.

You can see the graphic below shows parts of North Carolina will face over 20 inches of rain. This could be the worst storm to hit Carolina in 60 years because of its strength and because it will stall over land which means more flooding.

The worst part of the storm will be storm surge since it causes the most deaths. There is expected to be 15-20 feet of storm surge in the worst hit areas likely in North Carolina.

This will have a big effect on the economy. Any data taken from September which includes the mid-Atlantic region will no longer give us insight into how growth is trending.

Destruction of houses could cause prices to increase as there will be less supply. Then building will commence, which will boost home builder stocks.

There will also be thousands of cars destroyed which will create the need to purchase new ones in October. Just like Harvey last year, this storm could impact Q3 GDP growth and help Q4 growth.

JP Morgan estimated that this hurricane will cause the insurance industry to lose between $8 billion and $20 billion, depending on the timing and intensity of the storm.

Travelers stock fell 3.75% from Friday to Monday, but it was up 0.2% on Tuesday. The hurricane is probably priced in somewhat.

If it gets worse, then the stock will fall. AIG stock is down 2.84% in the past 3 trading days. The storm’s speed is currently 140 miles per hour. It should hit the coastline with about 115 mile per hour winds.

It will hit either North Carolina or South Carolina on either Thursday night or Friday morning.

Lowe’s shipped 800 truckloads of disaster related products to 100 stores. Boeing suspended operations in Charleston, South Carolina where it has 6,700 employees.