Texas Border Business
Hurricane Beryl made landfall in the Houston area on July 8 as a Category 1 storm. Sustained winds of up to 80 miles per hour and rainfall of up to eight inches across the metropolitan area caused significant damage. Flooding, downed trees, power outages, and structural damage were extensive, with preliminary estimates of $1.5 billion in Texas and $2.5 billion across the United States. The storm had weakened compared to the Category 4 and 5 levels reached as it caused massive destruction in the Caribbean. The Yucatan Peninsula and northern Venezuela were also affected.
The loss of life and human suffering is of paramount importance and should be the primary concern, as well as enormous emotional losses. Long-lasting power outages compound the difficulties, particularly given the summer heat.
Direct damage is only a part of the economic implications of the hurricane. Any economic stimulus, whether positive or negative, leads to additional responses and multiple rounds of business activity. Business operations have been interrupted, causing lost revenue and profits even beyond the damage to facilities. In many cases, these revenues cannot be recouped. Productivity has also been affected as workers are either absent due to problems with their homes and property or less effective on the job as they deal with those issues.
On the other hand, the act of repairing buildings and infrastructure damaged by wind and water leads to an increase in spending in the construction sector. Suppliers of the goods and services needed to get things back to normal will ultimately see additional opportunities due to Beryl. Replacing personal items, vehicles, furniture, and everything else will increase retail activity in the region. These benefits partially, but not totally, offset the overall economic losses.
Based on the modeling system that we have developed over the past 40 years and used to assess numerous natural disasters and current property damage estimates, when multiplier effects and the various positive and negative aspects of the economics of the storm are considered, the net impact of Hurricane Beryl could lead to economic losses (which would be observed over an extended period of time) including $4.64 billion in total expenditures, $2.02 billion in gross product, and $1.33 billion in earnings in Texas. For the United States, losses could total about $6.97 billion in total expenditures, $3.03 billion in gross product, and $2.00 billion in earnings (including effects within Texas as well as spillover to other areas).
In addition to the enormous human costs, Hurricane Beryl will have a significant net negative impact on the overall economy. However, the area will recover over time and likely resume its prior pattern of expansion in the future, although long-term climate factors are posing additional risks. Stay safe!