Days of torrential rains and flooding in southeast Texas have brought the country’s fourth-largest city to a standstill, but economists say it’s still too soon to tell how much of a toll Tropical Storm Harvey will take on the economies of the Gulf Coast and the nation.
Even more rain has been forecast for the area, meaning damage estimates are still preliminary. It’s even difficult to use previous natural disasters, such as Hurricane Katrina and Superstorm Sandy, as measuring sticks since the regions have different economic engines, economists said.
Houston’s lifeblood is as the nation’s oil and gas hub.
“Each disaster is unique,” said Jerry Nickelsburg, director of the University of California, Los Angeles’ Anderson Forecast. “The economic impacts depend on how extensive the damage is to the economic activity in the city. What will be important is what resources will be available and what will be brought to bear.”
Some of the costs could be offset by insurance payouts and federal emergency resources. President Donald Trump said Monday that Congress would move quickly to approve long-term funding for the recovery.
One immediate effect the rest of the nation could see is slightly higher prices at the pump.
As of Monday, Texas’ refining capacity was down nearly 2.2 million barrels per day due to the storm, according to S&P Global Platts.
Major ports in Corpus Christi and Houston were closed to vessel traffic, which was expected to delay imports and exports of crude and refined products, S&P Global Platts said.
Refiners had not reported any damage, according to S&P Global Platts.
States along the Gulf Coast and all the way up to New Jersey are affected since they are supplied by the gulf refineries, though the heaviest effect in terms of price jumps has been in Gulf Coast states, said Tom Kloza, global head of energy analysis for Oil Price Information Service.
Gasoline futures rose nearly 3 percent Monday.
Houston’s two big airports are expected to remain closed to all but relief flights until later this week, with runways flooded and nearby roadways under water.
More than 1,600 flights on Monday were canceled, the bulk of them at Bush Intercontinental Airport and Hobby Airport, according to tracking service FlightAware.com.
A third of U.S. chemical production also has been disrupted by Harvey, boosting prices and threatening shortages for basic industrial building blocks such as chlorine and ethylene.
And the deluge of rain from Harvey is soaking Texas pastures, leaving some animals stranded in floodwater in the state that leads the U.S. in beef production.
Economists said it would be difficult to predict the storm’s exact effect on the U.S. economy. However there was a “good chance” of a “slight but measurable impact” on the U.S. gross domestic product for at least this quarter, said Robert Kleinhenz, an economist at Beacon Economics and the University of California, Riverside’s School of Business.
In 2015, Houston’s real GDP was $471 billion, measured in 2009 dollars, while the U.S. real GDP for that same year was $14.5 trillion, Kleinhenz said.
“There will be some type of measurable impact, but I don’t think it will be huge,” he said.
“The real wild card right now, in my opinion, is how long will the metro area basically be stopped in its tracks by Harvey,” Kleinhenz said. “Then you start to figure out how the metropolitan area is going to recoup and rebound, and it’s definitely going to take some time.”
The GDP may rise in the fourth quarter from rebuilding and recovery efforts, though economists warned that this does not necessarily mean good news for individuals.
“The GDP captures an important measure, but I don’t think that sufficiently describes the extent of the damage we’ll feel out of this,” said Nick Vyas, executive director for the Center for Global Supply Chain Management at the University of Southern California’s Marshall School of Business. “This could … have a pretty big impact on personal wealth, personal assets.”
Japan’s GDP dropped after the country faced the twin difficulties of a high unemployment rate and the 2011 earthquake in Sendai, but later bounced back after the country mobilized resources to rebuild. But recovery efforts don’t necessarily tell the whole story.
“We tend to measure people better off if GDP is growing faster, but in these cases, people are worse off,” said Nickelsburg of UCLA. “It’s rebuilding homes that were destroyed. Your well-being is diminished.”
The Associated Press and Bloomberg News contributed.