This is a new installment in an ongoing series where Marc Bautis, Wealth Manager and Founder of Bautis Financial, comments on hot topics in the financial industry.
Are you and your loved ones well and safe? Have you been impacted by Helene or Milton? Our team would like to know… our advisors welcome your emails.
It’s been a rough couple of weeks for the Southeast, as Hurricanes Helene and Milton made landfall, and I wanted to check in.
Storms can take a massive toll on families and communities, with challenges that take months and years to resolve.
With an active hurricane season upon us, I’d like to take a moment to talk about how natural disasters can affect markets and the economy.
Natural Disasters and The Economy
Natural disasters typically impact the economy in a few ways:
- Regional, national, and even international supply chains can be disrupted as roads and ports close and goods struggle to move from place to place.
- Economic growth can slow down as businesses shut down, jobs are lost, and consumer demand slows down.
- Markets often experience short-term volatility as investors react to the news and rush to buy and sell
- Energy prices may spike due to scarcity and supply disruptions.
While some companies (such as insurers) typically take a hit from anticipated disaster losses, other businesses (like generator manufacturers) may see a spike due to expected demand.
The chart below shows the financial cost of some hurricanes in the last two decades.
Sources:
Investors.com | CNBC | Kiplinger
While natural disasters may have a severe short-term impact on local and regional economies, research suggests the long-term negative effects are limited.
Although, there is one note to consider: estimates of Helene and Milton damage may be low as it may take years to account for the full cost of property damage, business closures, and economic disruption.
Let’s also keep in mind that billions of dollars in financial losses are massive, but they’re still a drop in the bucket of the overall economy, which is over $27 trillion in size.
Numbers Don’t Tell the Full Story
Of course, the plain numbers don’t tell the full story of lives lost and lives disrupted.
Hard-hit areas may take a long time to recover, and some places may never fully return to normal.
In the weeks and months to come, we may see an impact from the hurricanes on inflation, unemployment, and growth data.
Storms Are Just One Factor to Watch This Fall
Markets are also grappling with rising tensions in the Middle East, as well as the politics of the upcoming election.
Investors are also monitoring inflation and labor market data for hints as to when the Federal Reserve might cut interest rates again.
If you have any questions or concerns, you’re welcome to book a complimentary consultation with our team of financial advisors using the link below. Be well, be safe, and hug your loved ones extra tight.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.