Cornell University economist Steven C. Kyle, an expert in macroeconomics and government policy, says economic indicators are ill-equipped to calculate the economic damage caused by natural disasters such as Hurricane Harvey – which is expected to drift back into the Gulf of Mexico today.
“It is still way too early to really know the impact Hurricane Harvey will have on the local and national economy, but it is fair to say that a significant portion of the country’s oil and oil-processing infrastructure will be out of action for a while.
“As for economic activity more generally, the first thing to be said is that our normal measures of such things (GDP, GNP, etc.) have not been designed with natural disasters like Hurricane Harvey in mind.
“At the most basic level, we have seen a huge destruction of capital assets – houses, roads, office buildings – and we will then see a burst of economic activity as these are rebuilt.
“That may make it look like we are getting a boost but I doubt if anyone in coastal Texas would tell you that they are better off. They lost a lot of stuff and are working to rebuild what they lost. Measures like the GDP pick up the effort to rebuild – but don’t count the loss in assets.”
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