The economic data for the third and fourth quarter of this year will be affected by the hurricanes experienced in Texas and Florida. Real GDP growth will be lower in the third quarter because of the storms, but will be higher in the fourth quarter and first quarter of next year. As an example, there are estimates of over 1 million autos destroyed in Texas from Hurricane Harvey. Those cars will need to be replaced with new cars, most of which will be paid for by insurance companies. This will boost auto sales in the fourth quarter from what it would have been otherwise. The same will be occur from Irma. This will boost manufacturing in the fourth quarter. Spending on reconstruction will cause consumption to grow at a faster rate in the fourth quarter after being depressed in the third quarter.

This weather factor will also affect inflation. Prices for food and energy have already risen as a result of the storms, but should subside in the fourth quarter and first quarter. Other sectors, such as building supplies, will jump in prices as demand rises from reconstruction needs. Consumption will be higher in the first half of next year as a result…

ProBank Austin Advisor – September 11, 2017