Washington Hurricane Ida is likely to affect the energy, chemical, and transportation sectors that have major operating centers on the Gulf Coast of Mexico, but the impact on the overall US economy should be modest as long as damage estimates do not increase significantly and the shutdown is not prolonged, economists noted.
Ida, which made landfall on Sunday, is linked to the fifth strongest hurricane to hit the United States. More than a million customers in Louisiana and Mississippi were without power on Monday, according to PowerOutage.US, which tracks outages across the country.
Oil prices did not show a rise in reaction to IDA on Monday.
Mark Zandi, chief economist at Moody’s Analytics, said Sunday that the disruption caused by Ida will likely lower its forecast for annual economic growth for the United States in the current July-September quarter by a few tenths of a percentage point. But he said that economic loss could be reversed in the last quarter of the year as a result of the reconstruction.
Analysts at Citi Investment Research also said that the impact on GDP growth will be offset by subsequent reconstruction. But they cautioned that “the inflationary effects may be more lasting as the demand for building materials, cars and workers will face the current shortage.”
Zandi estimates that GDP, the country’s total production of goods and services, will grow at an annual rate of 6.5% in the second half of this year, the same as the first. However, in addition to the effect of Ida, Zandi noted that the contagious delta variant of the coronavirus poses risks to the economic outlook, depending on how much it dampens spending on travel, restaurant meals and other forms of spending.
“The main channel for Ida to influence the broader economy is energy prices,” Zandi said. “We will have to see the extent of the damage to production in the Gulf and how long it will remain unconnected,” he added.
“Award-winning zombie scholar. Music practitioner. Food expert. Troublemaker.”