The Economic Implications of Hurricane Matthew
PHOTO: Hurricane Matthew makes landfall in South Carolina Saturday morning (Image via Twitter/@kellycass)
After ravaging the Caribbean and parts of the Southeast U.S., Matthew is heading out to sea and has been downgraded to a post-tropical cyclone.
The storm's impact is still being felt in many places, including North Carolina, where devastating flooding is likely to remain a threat in the coming days. As crews work to rescue victims and restore power in Florida, Georgia, South Carolina and North Carolina, the next step for officials will be to assess the damage across the Southeast.
According to Moody Analytics' chief economist Mark Zandi, approximately two-thirds of economic losses caused by hurricanes dating back to 1989 can be attributed directly to property damage, while the remaining one-third is typically due to economic output that was lost as a result, per USA Today.
It's too early to know for sure, but based on projections it seems Matthew will ultimately pale in comparison to two of the most costliest Atlantic hurricanes in history.
2005's Hurricane Katrina caused roughly $40 billion in insured losses on home and commercial properties, while 2012's Superstorm Sandy was responsible for roughly $20 billion. By comparison, property data firm CoreLogic projected Matthew would cause $4 billion to $6 billion in insured losses on home and commercial properties, per the Associated Press.
USA Today points out that those loses are often "offset."
"Most damaged homes, businesses and infrastructure are repaired or rebuilt, generating economic activity" writes Paul Davidson. "And at least some of the disruptions to retail and other businesses are made up in the following weeks and months as consumers release pent-up demand."
While many places will rebuild and tourists will be lining up to visit once they do, it'll take time.
"I feel badly for a lot of the businesses downtown that have been closed since Wednesday," Charleston resident Leigh Webber told the AP. "I noticed a lot of hotels were completely closed. I know some weddings were canceled and it was a huge financial loss for a lot of people."
Although the Southeast has been dealt a significant blow, Haiti is facing a much more daunting recovery effort. In addition to more than 1,000 Matthew-related deaths, Business Insider reported the Haitian government estimated $1 billion in damage, which is the equivalent of more than 11 percent of the Caribbean country's 2015 GDP.
Fortunately, South Florida was largely spared from Matthew. According to USA Today, the region has already been hurt by declining visitor numbers from its top international markets and concerns about the Zika virus. A direct hit from Matthew would have compounded the region's issues.
Moving forward, it will be interesting to see how the mass exodus of millions of residents and tourists impacts hotels and others businesses located outside of Matthew's path. Destinations including Atlanta, Charlotte and Tampa saw huge surges in visitors and hotel bookings ahead of the storm's arrival last week.
What's more, the countless small towns on the way to those major cities saw a massive influx of visitors they may otherwise not have had this time of year. The longer unsafe conditions keep some residents from returning home, the bigger the boost will be to those destinations' local economies — potentially offsetting some of the economic losses in a region looking for silver linings as they continue to clean up from a hurricane that was devastating but not nearly as bad as it could have been.
More by Patrick Clarke
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