Analysts say U.S. economy will take a hit

WASHINGTON — With businesses disrupted, fuel and chemical refineries out of commission and consumers struggling to restore their lives, Hurricanes Harvey and Irma will likely pack a tough double-whammy for the U.S. economy.

Nearly one-fifth of the nation’s oil refining capacity has been shut down because of Harvey, and fuel production has dropped sharply as a result, according to Bank of America Merrill Lynch. This has sent gas prices higher, leaving less money for consumers to spend in other areas.

But consumers will spend less anyway, at least in the near term, in the immediate aftermath of the storms. Even those ready to make purchases will face closed storefronts and dark restaurants.

Damage estimates from the two storms are still preliminary, particularly for Irma. Hurricane Harvey will likely cost up to $108 billion, according to Bank of America Merrill Lynch, which would make it the second-most expensive hurricane after Katrina.

Mark Zandi, chief economist for Moody’s Analytics, estimates that Irma will cause $64 billion to $92 billion in damage.

Analysts estimate that the nation’s annualized growth rate will be onehalf to one full percentage point slower in the July-September quarter than it would otherwise have been.

But repair work, reconstruction and purchases of replacement cars and other goods should provide an offsetting boost later this year and in early 2018.

“Construction activity will rocket in the affected areas,” predicted Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Households’ spending on building materials, furniture, appliances, and vehicles will all be much higher than otherwise would have been the case.”