WASHINGTON (AP) — The tornadoes and floods that have devastated parts of the South and Midwest have also hammered the local economies — flooding farmlands, suspending factory work and disrupting energy production.
Yet for the U.S. economy overall, the damage will likely be scant. At most, the disasters might knock one-tenth of 1 percentage point off national economic growth in the April-June quarter, Wells Fargo economist Mark Vitner estimates.
"It's so small, you aren't going to notice it," said Patrick Newport, an economist at IHS Global Insight.
Others caution, though, that the tornado season hasn't ended yet, and the hurricane season has yet to arrive. Further major disasters could begin to weigh on the U.S. economy.
Early forecasts estimate that the economy will have grown at a 2.5 percent to 3 percent annual rate in the current April-June quarter. That's a relatively weak pace that wouldn't spur robust job growth. Still, it's above the 1.8 percent growth the government reported Thursday for the January-March period. The natural disasters haven't led economists to reduce their estimates for April-June quarter.
"This is a very extreme year," said Tom Larsen, a senior vice president at Eqecat, a firm that estimates the impact of catastrophes for insurance companies and government agencies. "If it were to stop right now, it would be a once every 25 years' or every 50 years' occurrence."
But Larsen doesn't expect it to stop. "There will be more tornadoes and more property damage," he said.
Typically, damage caused by tornadoes is more concentrated than damage from powerful hurricanes, such as Katrina, economists say. The tornado that devastated Joplin, Mo., on Sunday probably won't slow the overall state's economy very much, said Ben Kanigel, an associate economist at Moody's Analytics. That's because Joplin accounts for only about 2 percent of Missouri's economic output.
Larsen estimates that the Joplin twister, the deadliest in the United States in more than six decades, and the tornadoes in late April that damaged parts of Alabama and six other Southern states could cause more than $8 billion in losses. His firm hasn't yet made a similar estimate for the Mississippi flood.
Though a blow to the local areas, $8 billion in losses would hardly make a dent in a national economy that produces about $15 trillion in goods and services every year. The United States is the world's largest economy.
The economy is measured by the gross domestic product. The GDP tracks only what the economy produces; it doesn't account for wealth or property. So if a tornado destroys a factory, the value of the lost factory isn't counted in GDP. Only its lost output is. Likewise, the loss of a house and other personal property isn't reflected in GDP.