As the debate rages about what effect hurricanes Irma and Harvey will have on the incoming economic data and, perhaps more importantly, the extent which any negative impact will not only prove transitory, but will in fact turn into a net positive as the rebuilding effort provides a fillip to GDP down the road, we thought it was worth highlighting what BofAML’s econ team is calling their “chart of the month.”
Thanks presumably to their retail presence, BofAML benefits from access to high frequency spending data and on Wednesday, they’ve utilized that to get a feel for how dramatic the impact was from Harvey. To wit:
Hurricane Harvey first crashed down on the shores of Texas on August 25th, displacing thousands of individuals and leaving behind considerable destruction. As we discussed last week, the hurricane will create distortions to the upcoming economic data, including consumer spending. To test the impact using our card data, we examine daily spending in Texas which shows that spending picked up in the days heading into the hurricane but remained depressed through the event and in the days after.
We estimate that the net reduction of spending in Texas sliced 0.1-0.2pp from the monthly growth rate of total retail sales ex-autos in August.
So there’s nothing particularly “surprising” there (per se), but the high frequency snapshot does throw into stark relief the whole “giveth and taketh away” (or “taketh away and then giveth back” depending on what data you’re looking at) dynamic at play when it comes to natural disasters and econ.
The question, as always, is
weather whether the net effect will be net positive for the economy – because there’s no question that the net effect in terms of the human toll is decidedly negative.