The devastation of Hurricane Harvey on Houston, the 4th largest city in the United States, has been predicted to negatively impact national activity and employment, according to Chad Moutray, chief economist for the National Association of Manufacturers.
The damaging effects of Hurricane Harvey left physical scars on Texas, and to an extent, a few bruises to the national economy. While some can argue that huge widespread events actually spur economic re-structuring, the Federal Reserve reported that industrial production decreased by nearly 1% In August from July. To put this number to scale—this decline was akin to that during the 2008 recession. This decrease in production was attributed to less oil drilling and petroleum refining.
Due to a decreased supply of oil, gas prices rose, and as a result, consumers have less money in their pockets to spend on other things. This accounts for the “C” component in the GDP equation.
At a rudimentary level, economists expect overall output to decrease in short run because of storm-related job losses, but note that it will ultimately increase in future quarters when jobs and structure start to come back. In the long run, however, the Harvey won’t drastically affect the big economic indicators: GDP, unemployment, and inflation.
The Wall Street Journal forecasted that Hurricane Harvey will “reduce the pace of job gains by about 27,000 jobs a month” in Q3. By Q1 of 2018, forecasters predict a boost of 13,000 jobs. Economists also predict GDP will fall by 0.3% in the third quarter.
To add salt to the wound, most homeowners and business-owners did not have flooding insurance, which additionally decreases their ability to spend and invest. It’s almost analogous to the effects of a stock market crash, says Constance Hunter, chief economist at KPMG.
Although the commerce department could not completely isolate the effects of Harvey on brick and mortar retailers, the weeks following the storm saw a mix of sales drops and increases. Necessity goods sales increased, including home furnishing supplies and grocery stores, while sales of non-necessity goods decreased. For instance, gas-station sales rose 2.5% in a month, due to higher oil prices. Internet sales fell a percent, the largest decline since Q2 2014. Another uptick to the equation is a 0.2% increase in auto sales, due to the loss of automobiles (a necessary good) from the storm.
Overall, a small dip in productivity will be seen for a quarter, due to rising oil prices, lost assets, and decreased consumer spending. Though only a short-term scale, consumer spending, which accounts for two-thirds of GDP, will still have a profound effect on the surrounding economic and regional locus.
Could having a successful love life also be attributed to economic downturn? The New York Times reported that Match.com reached more dating app first dates are initiated when market sentiments are low.
With the advent of online based dating sites, a swath of analytics are available to derive sociological meaning from. Match.com’s data shows strong correlations of ambitious first dates right around the time the economy tanks.
Despite sky-rocked unemployment rates, foreclosures, and failing businesses in the thick of the 2008 recession, Match.com saw their fall quarter as their busiest period in seven years (since post 9/11 woes). Even with monthly fees of $60, eHarmony.com reported a 20% increase in membership, and OkCupid saw a 50% increase in activity. Misery loves company, and with the increasing distrust in financial institutions, many looked for stability in romantic partnerships. In fact, Match.com and eHarmony.com logged some of their highest traffic volumes on days when the Dow Jones took a nose dive.
Tighter personal budgets prompt less discretionary spending, which includes small luxuries such as going out for drinks, where people typically meet with the goal of finding romantic prospects. Singles no longer need to spend money buying a potential partner drinks when first meeting them. Neurologists also say that good first dates release brain chemicals that can ease worries in other spheres of one’s life (e.g. layoffs, plummeting stocks, etc.)
In the long run, finding a partner and splitting bills is cost effective. In tough times, the idea of sharing bank accounts and receiving tax benefits incentivizes the subconscious desire for marriage.
Should hopeless romantics look forward to a dip in the market for better chances of finding love? While the choice between financial stability and love is certainly not a zero-sum game, the data doesn’t lie in times of economic woes bringing together more singles. Akin to the unemployment rate, perhaps it is worth looking at the spikes and drops in singles actively pursuing relationships.