August 29, 2011--
First let me say, hurricanes are horrific events and not to be trivialized as people lose their lives and billions of dollars in damage are left in their wake. So far 24 people have been killed and upwards to 7 billion dollars in damages is considered a low estimate at this time and is expected to climb as flood damages accrue and insurance claims are registered.
However, there is another side to hurricanes that can be likewise dark and repugnant, as some end up making a profit from the disaster, or not so repugnant they might get a job.
One of the first profiteers is investors in Home Depot, Lowes Home Improvement, Lumber Liquidators and other home repair store brethren.
DailyFinance.com reports—and rightly so—“Home improvement stores are the one investing niche that always set off radars when nature delivers a pummeling. After all, it’s these hardware superstores that are transformed into popular outlets for plywood, generators, and batteries before the storms blow into town. These same retailers then see their home improvement supplies fly off the shelves as homeowners and landlords restore their properties after the storm.”
Bloombergs reports, “Lowe’s Cos. shipped more than 1,000 extra truckloads of flashlights, batteries and generators to East Coast stores, said Katie Cody, a company spokeswoman. The Mooresville, North Carolina-based company activated its natural-disaster price suspension plan and didn’t raise the cost of emergency goods in affected areas, Cody said.”
These stores must know by now that it’s against the law to price gouge and raise prices.
Insurance companies usually the losers in hurricane events were spared with Irene because it could have been worse. At least that’s their take on it, and apparently investors feel the same way. The share prices of firms such as Allstate and Travelers posted sizable gains Monday morning, leaving the stocks little-changed in price over the past 10 days. The question on the minds of many is “Do insurance companies ever really lose?”
Hurricane damage brings with it an increase in jobs for carpenters, electricians, plumbers and building contractors in general. Statistics available from previous hurricanes show in the ravaged areas there is a temporary spike in employment. The problem is these are short term jobs and any boost in employment statistics could disappear once the repairs are completed.
Some areas, however, might see a boost in employment. It is notable that a year after the 1994 Northridge earthquake here in Southern California had damages totaling $42 billion by today’s standards when unemployment went from 9.1 percent to 7.1 percent. Louisiana’s post Katrina employment rate went from 6.7 percent to 3.9 percent. However, some believe that this was due to so many had left the area and did not return altering the population.
In a study by the Dynamic Institute the employment statistics after hurricane Andrew and Opal were examined. It was determined that unemployment rates were already high in Miami-Dade County in late 1992 due to the recession and the additional impact of major layoffs and declines in tourism. Andrew caused the unemployment rate to increase by 0.8 percentage point to 11.6 percent in September of 1992. Rates dropped rapidly in 1993 as the local economy recovered from Andrew and the recession.