Latest reports should finally reveal how badly hurricanes hurt economy
The toll that Hurricanes Harvey and Irma took on the U.S. economy will finally be revealed this week, though analysts are still forecasting solid thirdquarter growth in a testament to the economy’s resilience.
Reports on business investment and new home sales will also be released.
Business investment has rebounded smartly this year on an improving global economy and a revival in U.S. oil drilling. In Commerce Department reports on orders and shipments of long-lasting goods such as computers and cars, capital goods orders excluding aircraft and defense — a proxy for business capital spending — rose a robust 1% or so in both July and August. Economists expect Commerce on Wednesday to announce more modest growth of 0.2% in that key measure in September.
New home sales have risen this year, though they’ve been curtailed by shortages of construction workers and lots. Hurricane Irma likely further held back sales in Florida last month, Nomura economist Lewis Alex- ander says. On the positive side, rebuilding in the months ahead could boost new home sales somewhat, he says. Economists expect Commerce to report that new home sales fell 1.8% in September to a seasonally adjusted annual rate of 550,000.
After Hurricane Harvey slammed the Houston area in late August and Irma tore through Florida in early September, some economists predicted a hit that would lower third-quarter economic growth nearly a percentage point to about 2% — in line with the tepid average during the 8-year-old recovery. But the nation’s econ- omy has been packing its own punch lately, with consumer spending rising on steady job and income growth, and business investment and stockpiling advancing solidly. Exports also have been strong as foreign buyers step up spending amid the strengthening global economy.
Still, Alexander says, the hurricanes likely dampened business investment in structures, while housing construction was constrained by the labor and land shortages. Overall, economists expect Commerce on Fri
day to report solid growth of 2.5% at an annual rate in the July to September period.