Last week I gave my annual economic forecast, and for those unable to attend, here are the highlights. In the first part, I analyzed the impact of Hurricane Helene on the labor market.
Augusta recorded a record level of employment in October, the month after Helene hit. Employment rose by 100 to 248,000. Four Metropolitan Statistical Areas (MSAs) were hit by Helene (Augusta, Hinesville, Savannah, and Valdosta), and employment in those MSAs rose by 175 on average. Employment in MSAs totally unaffected by Helene fell to 88. Additionally, earnings in the four MSAs hit by Helene rose $5.31 on average compared to unaffected counties which did not change.
There were some winners and losers. Hotels did particularly well. Data from visitaugusta.com revealed occupancy up 46.6% to 81.4% compared to October 2023. The average daily room rate increased 22.4% to $111.46 and overall room revenue was up 74.1%.
Trade transportation and utilities were hard hit. Although utilities such as electricity and water may have seen an increase in employment, this was more than offset by blocked roads limiting transportation and closed retail establishments. Employment in this sector across the four MSAs hit by Helene fell by almost 0.5%. Another sector hard hit was services, employment fell 0.1 percent in the four MSAs hit by Helene when it increased by 0.1 percent in MSAs totally unaffected.
So far, we only have one data point for analyzing the impact of Helene on the labor market. Academic research suggests that the effects may be felt several years into the future. However, that research shows mixed results with unemployment falling in some cases, while other research finds employment falling. There is some evidence that earnings growth remains higher in counties affected by hurricanes compared to those that were not.
The impact of local government finances is also mixed according to academic research. Intergovernmental transfers from the state and FEMA help in the first five years but 6 to 10 years after a hurricane local government revenues and expenditures fall. Local governments also struggle to take out debt and the risk of default on government debt increases.
The hurricane certainly has short-term impacts, some positive and some negative. Our community now needs to consider the long-term economic impacts and look for opportunities to Build Back Better.
