The latest Moody’s Analytics estimate for the damage caused by Hurricane Harvey is between $86 billion and $108 billion, making it the costliest disaster in U.S. history. The full extent of the damage done to the Houston area economy has yet to be seen given the extensive and widespread flood damage. While the cost of Hurricane Harvey will take a large toll on the Houston regional economy, its macroeconomic impact nationally will likely be modest and temporary. Gasoline prices rose to a two-year high as a result of the disruption to refineries along the Gulf Coast but have since retreated. The Port of Houston has reopened with only minor damage to the shipping hub’s terminals. While the destruction caused by the hurricane will not be directly accounted for in the GDP calculation, the eventual anticipated increase in consumer spending, supported by government aid and insurance payments as well as the rebuilding of damaged structures, has the potential to be at least a short-term stimulus to growth in Houston.
Going into the final months of 2017, it appears as though the U.S. economy remains on solid footing. Consumer confidence is at peak levels, while job gains maintain a steady pace, approaching full employment. Pricing in both the residential and commercial real estate markets remains fairly firm, and mortgage lending has picked up through midyear. Most signs indicate that the U.S. economy is sound. Yet, the seemingly Phillips-curve-defying inflation rate has Fed officials wringing their hands on whether to raise rates a third time this year and to initiate the unwinding of its unprecedented balance sheet.
Source : CBRE Global Investors