September Hurricanes Impact Employment in Affected Areas

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The third quarter, which just concluded, will likely see continued strong growth, but most economists expect a major impact from the large recent hurricanes that affected Texas, Florida, and Puerto Rico (note: Puerto Rico is a U.S. territory, and territorial GDP figures are not included in overall U.S. GDP).  The U.S. metro areas most affected are those in Texas running along the Gulf Coast (most notably Houston-The Woodlands-Sugar Land), which suffered extensive flood damage, along with most Florida metro areas, which suffered primarily wind damage.  This is expected ultimately to lead to rebuilding and demand for construction materials, including paint and coatings.

The areas affected are a significant part of the U.S. economy.  The Houston metro area is the 6th largest metro area in the country, and overall, the affected Texas metros represent 3.2 percent of the U.S. GDP.  The more extensive Florida metro areas themselves represent 4.4 percent of the U.S. economy. In the short run, the coatings industry appears to be more affected by supply chain disruptions and disruption to construction projects than by repair and rebuilding, which are likely to occur in 2018 and beyond, as insurance claims are negotiated and owners find workers and firms to undertake new projects.

One metric that shows the scale of the disruption is a figure tracked by the Bureau of Labor Statistics – which tracks those who are employed but not at work due to bad weather.  This figure spiked in September to nearly 1.5 million, exceeding any recent disruptions (primarily related to adverse winter weather). Typically, aside from extreme winter weather, this figure is well below 100,000 workers, and in fact, barely exceeded 200,000 at the peak of Hurricane Katrina, which puts the current figure into context. This number should recede relatively quickly, based on past experience, but is likely to have some impact on October employment and productivity, as people in Texas and Florida continue to recover from the hurricanes.


Contact ACA’s Allen Irish for more information.