CHANDAN KHANNA/Getty Images
Hurricane Milton is pummeling Florida days after Hurricane Helene battered several states including North Carolina, causing widespread destruction and more than 220 deaths.
The two events are the latest sign that hurricanes are becoming more frequent, more ferocious, and more costly. They're also hitting employment and economic growth, at least in the short term.
"Hurricanes are the most costly weather and climate extreme event to impact the US historically, in terms of total dollars and average cost per event," Adam Smith, a climate scientist at the National Oceanic and Atmospheric Administration (NOAA), told Business Insider.
The US has experienced 363 billion-dollar weather disasters costing a total of $2.6 trillion between 1980 and August 2023, NOAA data shows. Hurricanes accounted for $1.3 trillion or about half the total cost, an average of $22.8 billion per storm.
The number of hurricanes striking the mainland US has also jumped from 12 between 1961 and 1970 and between 1971 and 1980, to 18 between 2001 and 2010, and 19 between 2011 and 2020, per NOAA data.
Helene has caused an estimated $34 billion worth of destruction, and Milton threatens to deal tens of billions of dollars in damage too, Jefferies analysts said in a note this week.
Hurricane Harvey in 2017 and Hurricane Ian in 2022 cost an estimated $159 billion and $119 billion each, ranking behind only Hurricane Katrina's $200 billion toll in 2005.
Hurricanes are becoming more costly because the amount and value of assets exposed and vulnerable to storm damage has increased, Smith said.
He also said that climate change — higher ocean surface temperatures fuel stronger hurricanes, and warmer air carries more rain — has led to more rainfall, a greater risk of storm surges, and a higher chance of rapid intensification.
The most severe storms have become more intense with about a 10% rise in maximum sustained winds on average, leading to a "roughly 33% increase in destructive potential," Michael Mann, a climate expert at the University of Pennsylvania, told BI.
Before Milton made landfall, analysts at Oxford Economics said in a note that about 2.8% of US GDP was in its direct path. They estimated that a Category 5 storm could lower fourth-quarter annualized GDP growth by 0.14 percentage points, from a forecasted 2.3% to below 2.2%. Milton was downgraded to Category 3 before striking Florida.
"For Milton, tourism, trade and transportation will be hit," Ryan Sweet, Oxford's chief US economist, told BI.
Helene is already poised to reduce nonfarm payrolls for October by 40,000 to 50,000 jobs, and Milton could deal a further blow to employment, he said. Job growth was trending at 167,000 a month, but that number could end up being under 100,000 this month in light of the Boeing strikes and Helene, even before accounting for Milton, Sweet said.
The most economically impactful hurricanes disrupt energy infrastructure like offshore rigs and refineries, driving up national gas prices. They can also hit home sales and housing starts, and extensive flooding can delay the return of people who evacuated affected areas, and hamper rebuilding efforts, Sweet said.
New research finds that hurricanes harm human health more than previously thought, exacerbated by climate change fueling more damaging storms. The upshot is "far more death and destruction," Mann told BI.
He said hurricanes are causing "more death and disease, which definitely propagates through the economy."
Some research suggests the economic costs of hurricanes are largely offset by the rebuilding efforts that follow. Repairs following a single hurricane can indirectly support nearly 248,000 jobs, generate over $17 billion of labor income, and contribute more than $30 billion to GDP, according to Implan, an economic data provider.
In effect, every dollar spent on hurricane repairs generates another $1.72 in the economy, benefiting sectors ranging from retail and housing to banking and oil refining, Implan said.
"Rebuilding should provide a boost to economic activity in those affected regions in subsequent months, and potentially years," Sweet told BI, quoting from his recent note. "A ton of federal and insurance money will flow into the impacted areas, which will boost economic activity."
The damage might be offset for now, but whether that will continue with rising temperatures and soaring costs remains uncertain.
Eventually, "increasing hurricane damages will exceed the coping capacities" of the US economy, according to a 2022 paper published by the Potsdam Institute for Climate Impact Research.
