How Florence could hurt area economy
Ports are closing. Farmers are moving hogs to high ground. Dealers are moving cars into service bays for refuge. And up to 3 million energy customers in North and South Carolina could lose power for weeks.
Across the Carolinas, Virginia and Georgia, businesses are bracing for the economic damage Hurricane Florence is expected to inflict on the area. Industries like tourism and agriculture will likely suffer, and the losses won’t be easily or quickly overcome.
Once it makes landfall, Florence is expected to lash coastal communities with 130 mph winds and to dump several feet of water. Flooding could prove devastating. The storm will likely damage homes and businesses, kill crops, drown livestock, wash away cars and suspend much of the area’s economic activity.
“These storms can be very disruptive to regional economies, and it takes time for them to recover,” said Ryan Sweet, an economist at Moody’s Analytics.
Sweet said he thinks Hurricane Florence could cause the U.S. economy’s growth to slow a few tenths of a percentage point, on an annual basis, in the July-September quarter. Michael Walden, an
economist at North Carolina State University, calculates that Florence will deduct about $200 million of output a day from North Carolina’s $550 billion-ayear economy until business returns to something close to normal.
It could have been worse. Labor Day marked the end of the peak tourism season in the Outer Banks of North Carolina and other coastal getaways. There are now fewer tourists to send away.
Clearing skies after the storm
In fact, as with the aftermath of previous hurricanes, the region could eventually receive an economic boost once construction crews come out to rebuild and repair damage and as insurance payments and federal disaster aid flow in.
“The ironic thing is, when there’s a rebuilding effort, that can energize local economies,” Walden said.
“Typically, we see a stimulus effect that creates jobs and raises incomes for South Carolinians,” said Joseph Von Nessen, a research economist at the University of South Carolina. Hiring is likely to be especially strong in construction and at retailers that sell building materials and supplies.
Hurricane Florence is slamming a region that is economically diverse as well as sizable. Combined, North and South Carolina boast an economy bigger than Saudi Arabia’s.
High-tech auto plants coexist with beachfront bed-and-breakfast inns and peanut farms.
North Carolina’s Duplin and Sampson counties, just inland, sell more hogs and pigs than anywhere else in America. Duke Energy warned that Florence could cut off power to anywhere from 1 million to 3 million customers in North and South Carolina, potentially leaving them without electricity for several weeks, said spokeswoman Grace Rountree.
Two big fuel pipelines stand in the hurricane’s path, but analysts say they think the storm is unlikely to disrupt the flow of gasoline or other products.
Still, analysts for S&P Global Platts say it’s possible the Colonial and Plantation pipelines could be affected by power outages or damage to pump stations. Those pipelines carry fuel from the Gulf Coast to much of the eastern United States.
Analysts expect a temporary boost in gasoline demand as people flee Florence, followed by weaker demand during and immediately after the storm. But the damage to energy facilities is likely to be far milder than the devastation left by Hurricane Harvey, which last year battered Houston, the heart of the U.S. energy industry. Flooding closed refineries along the Texas and Louisiana coasts and caused gasoline prices to spike.
No ships were entering or leaving the Port of Virginia in Hampton Roads on Wednesday. And the port in Charleston, South Carolina, was suspending operations from Thursday through Saturday and possibly on Sunday.
And Florence will almost surely depress auto production in South Carolina, where Volvo already has closed a new factory near Charleston because it’s in an area under mandatory evacuation orders, said spokesman Russell Datz. Volvo is coordinating with parts suppliers so it will be ready to resume production, according to Datz, who said he wasn’t sure how long the plant would be down.