How Hurricanes Damage the Economy

Why Harvey, Maria, Florence, and Other Hurricanes Were So Destructive

Hurricane damage
••• Photo by Scott Olson/Getty Images

Hurricanes are the most damaging of natural disasters. A Category 4 or 5 storm can lower U.S. production and increase unemployment. Large hurricanes depress the stock market and other financial markets.

The United States is highly vulnerable to hurricane damage. Coastal shoreline counties create 40 percent of America's jobs. They're responsible for 46 percent of its gross domestic product

Hurricane Damage in the U.S. 

The Congressional Budget Office (CBO) estimates that 1.2 million Americans live in coastal areas that are at risk of substantial damage from hurricanes.

The CBO defines substantial damage as at least 5% of average income. Most of these densely populated areas lie less than 10 feet above sea level, according to the National Hurricane Center. 

The CBO estimates that hurricane damage is $28 billion a year on average. Florida contributes 55% of that, and Texas and Louisiana add 13% and 9% respectively. 

It's estimated that the average annual damage costs will increase to $39 billion by 2075. Almost half that gain will come from increased development along U.S. coastlines. The other half will be due to climate change.

Global warming means higher ocean temperatures at deeper depths to feed hurricane strength. It also creates more humidity in the air and fewer winds around the storm. M.I.T. models predict that there will be more hurricanes in general by 2035, and that 11% of these will be Category 3, 4, and 5 classes. It predicted 32 super-extreme storms with winds above 190 miles per hour.

Who Pays for All This Damage?

The federal government pays for 60% of hurricane damage, and most of that money comes from three agencies. The Federal Emergency Management Agency (FEMA) pays almost two-thirds of the government's bill. The Department of Housing and Urban Development (HUD) and the U.S. Army Corps of Engineers collectively pay a little more than a third.

State and local governments, insurance, and private individuals pay the rest. 

FEMA has paid out $81 billion to state, territorial, and local governments in response to natural disasters since 1992. But a New York Times analysis of federal data found that many buildings were rebuilt in place. The new structures are just as defenseless as the old ones against the next storm as a result. 

The 2018 Hurricane Season

The National Oceanic Atmospheric Administration said that the 2018 season will be remembered most for Hurricanes Florence and Michael. There were 15 named storms, eight hurricanes, and two above Category 3. An average season has 12 named storms, six hurricanes, and three major hurricanes.

These hurricanes included: 

  • Hurricane Lane: Hurricane Lane dropped a record 52.2 inches of rain on the Big Island of Hawaii. The Category 3 storm struck on Aug. 24, 2018.
  • Hurricane Florence: Hurricane Florence hit North Carolina on Sept. 14, 2018. It was a Category 1 storm when it made landfall. Rainfall was 35.93 inches, the fourth worst in the United States and a 1-in-1,000-year event. There were 39 fatalities in the state as of Oct. 4. At least 340,000 people lost electricity, 10,000 went to shelters, and 1,500 roads were closed. According to reinsurance firm Munich Re, property damage totaled $14 billion. North Carolina's governor signed a $50 million relief package. The governor of South Carolina ordered the evacuation of 1 million people. Hurricane Florence was very powerful for four reasons. First, it hit North Carolina's coast dead on, piling up water in front of the storm. Second, the counterclockwise spin of the storm fed water into the center. Third, North Carolina’s Outer Banks built up tides instead of letting the water escape out to sea. And finally, the ocean was one to two degrees warmer than normal.
  • Hurricane Walaka: Hurricane Walaka was a category 5 monster that destroyed the East Island of Hawaii on Oct. 1, 2018. This island, which is now submerged, was a critical habitat for endangered Hawaiian monk seals and sea turtles.
  • Hurricane Michael: Hurricane Michael was a Category 4 storm that hit the Florida Panhandle on Oct. 10, 2018. The death toll reached 39 by Oct. 22. It brought a 7.7-foot storm surge in some areas. There was $3 to $5 billion in wind and surge damage. According to Munich Re, total cost was $16 billion. More than 1 million customers lost power. The hurricane hit Georgia as a Category 3 storm, and it was the first hurricane of that strength since the Georgia Hurricane of 1898. The storm had enough forward momentum to dump 4 to 6 inches of rain on the Carolinas in areas still hadn't recovered from Hurricane Florence. 
  • Typhoon Yutu: Tropical cyclones are called hurricanes if they begin in the North Atlantic, central North Pacific, or eastern North Pacific. They're called typhoons if they start in the Northwest Pacific. Typhoon Yutu was a Category 5 storm when it hit the U.S. Mariana Islands on Oct. 15, 2018. Its 180 mile per hour winds made it the most powerful cyclone to hit any part of the U.S. since 1935. It was the fifth Category 4-plus storm to hit U.S. soil in 14 months. That hadn't happened in recorded history. 

The 2017 Hurricane Season

The 2017 hurricane season was particularly harsh. A high-pressure system kept the northeast in summery temperatures through September. It also kept cooler winds from Canada out of the region. Those winds usually drive hurricanes out to sea. Another high-pressure system developed around Bermuda. That sent hurricanes right into Florida and the U.S. east coast. 

Some of the worst hurricanes in 2017 included: 

  • Hurricane Maria: Hurricane Maria was a Category 5 storm when it hit Dominica on Sept. 18, 2017. It devastated Puerto Rico on Sept. 20, home to 3.5 million Americans. It cost $90 billion in damages there even though it had been downgraded to a Category 4 storm by the time it hit. The death toll was 2,975. Researchers estimated in May 2018 that 4,645 people died after the storm knocked out electricity and transportation. Governor Ricardo Rossello asked for $94 billion in federal aid to restore power and housing. Insurers estimated their costs would be $85 billion. Maria knocked out power to the entire island and weakened a dam enough to force authorities to evacuate 70,000 people. Approximately 15,000 people were forced into government shelters. 
  • Hurricane Irma: Hurricane Irma was the most powerful Atlantic hurricane in recorded history. Damage was $50 billion. Accuweather estimated that the total cost to the economy was $100 billion. It was a Category 5 storm when it made landfall on Barbuda on Sept. 6, 2017. Its winds were 185 miles per hour for 37 hours, a new record. Irma was downgraded to a Category 4 hurricane before it hit the Florida Keys on Sept. 10. That was the first time in 100 years that two storms Category 4 or larger hit the U.S. mainland in the same year. President Trump declared emergencies in Florida, Puerto Rico, and the U.S. Virgin Islands. Congress appropriated $35.5 billion in emergency funding. Of that, $16 billion was debt forgiveness provided by the National Flood Insurance Program.
  • Hurricane Harvey: Hurricane Harvey was a Category 4 storm when it hit Texas on Aug. 25, 2017. Texas Governor Greg Abbott initially estimated damage at $180 billion, but the National Hurricane Center said the final figure was closer to $125 billion. The hurricane affected 13 million people from Texas through Louisiana, Mississippi, Tennessee, and Kentucky, and 88 people died from the storm. Congress appropriated $15 billion for disaster relief. Harvey damaged 200,000 homes, 12,700 of which were completely destroyed. More than 500,000 people asked for federal assistance. The storm forced 5% of the nation's oil and gas production to shut down. Gas prices rose from $2.35 a gallon to $2.49 a gallon. 

How Hurricanes Cause Damage—High Winds

Hurricane damage occurs from seven sources. The first is high winds. The Saffir-Simpson Hurricane Wind Scale puts wind speeds, damage inflicted, and power outages into five categories.

Category / Wind Speed / Surge in Feet / Damage / Home Damage / Tree Damage / Power Outages

1

74-95 mph

4-5

Some

Some

Branches

Days

2

96-110 mph

6-8

Extensive

Major

Snapped

Weeks

3

111-129 mph

9-12

Devastating

Major

Snapped

Weeks

4

130-156 mph

13-18

Catastrophic

Severe

Toppled

Months

5

157+ mph

19+

Catastrophic

Destroyed

Toppled

Months

Storm Surge 

The second source is storm surge, the rise in water above normal high tide. The hurricane's high winds push the water up onto the shore. When the storm surge coincides with high tide, you get storm tide. That unusual occurrence created the devastation during Hurricane Sandy. Water weighs 1,700 pounds per cubic yard. The force of the storm and the weight of the water combined is very damaging.

A 23-foot storm surge would flood 67% of U.S. interstates, including 57% of arterial highways. It would cover almost half of all rail miles, 29 airports, and almost all ports in the Gulf Coast area. 

Extreme Rainfall 

Third is extreme rainfall. Hurricanes can drop up to six inches of rain per hour. Hurricane Harvey dumped 51.88 inches in Cedar Bayou on Aug. 26, 2017. That’s a record for a single storm in the continental U.S. These down-bursts create flash floods. Flooding accounts for 59% of deaths. It also ruins equipment, automobiles, and homes. 

Location 

Location is the fourth source. Most U.S. hurricanes form in the Gulf and the Caribbean. Hurricanes only form over oceans near the equator. As warm moist air rises, cool dry air rushes in to replace it. If this cycle intensifies enough, it creates a hurricane. These storms lose power without the warm moist ocean air to feed them when they make landfall. 

Hurricane Season 

Fifth is the time of year. Hurricane season runs from June 1 to Nov. 30. The most dangerous time is between mid-August and mid-October because this is the least windy time of year. High winds destroy hurricanes before they have a chance to form. 

Preparedness 

Sixth is preparedness. Cities that evacuate their populations have fewer deaths and human destruction, but evacuations don't prevent property damage.

Most hurricanes enter homes through garages. The most storm-resistant are windowless garage doors that are less than nine feet wide and that can withstand 50 pounds or more of pressure. Homeowners should fortify their roofs with hurricane clips. Many builders use insulating concrete forms instead of timber construction. They also anchor the home to the foundation.

Global Warming 

A seventh and recent cause is global warming. The earth's average temperature rose .13°C each decade between 1956 and 2005. That might not seem like much, but it's double the rate for the 100 years between 1906 and 2005. Antarctic glaciers are losing mass at an unusually rapid rate, and this increases sea levels, which worsens storm surges.

Climate change can also cause hurricanes to remain in place longer. A 2018 study found that hurricanes have slowed by 10% since 1949. The steering winds that push them are slowing down. These winds draw power from the temperature differences between the tropics and the poles, but climate change has raised pole temperatures. This lessens the temperature difference, weakening the winds that now move hurricanes more slowly.

Top 10 Most Damaging Hurricanes

  1. Hurricane Katrina was the most damaging hurricane by far. Katrina hit Louisiana on August 29, 2005. It left 1,836 people dead. It was a Category 3 when it made landfall. Katrina had been a Category 5 when it was still out to sea. University of North Texas Professor Bernard Weinstein put the total economic impact at $250 billion. Katrina damaged 19% of U.S. oil production, causing gas prices to rise to almost $5 a gallon. Economic growth slowed to 1.3% in the quarter after Katrina as a result. The National Hurricane Center estimated direct damage at $125 billion in 2005 dollars. Half these losses were a result of flooding in New Orleans. 
  2. The second most damaging hurricane was Harvey. This Category 4 storm cost $125 billion.
  3. Maria was the third worst with $90 billion in damage. 
  4. Hurricane Sandy was fourth with $70.2 billion in damage when adjusted for inflation. Sandy hit New Jersey on Oct. 29, 2012. It combined a 990-foot wide hurricane and a cold front and storm tides were worsened by a full moon. The storm damaged 650,000 homes. Eight million customers lost power. Sandy was responsible for 159 deaths.
  5. Hurricane Irma was the fifth worst. The Category 5 storm cost $50 billion. 
  6. Hurricane Andrew, a Category 5 storm that hit Florida in 1992, comes next. It destroyed $47.8 billion when adjusted for inflation. It hurled a 16.9-foot storm tide into Biscayne Bay, a record for the southeast Florida peninsula. 
  7. Hurricane Ike cost $34.8 billion when adjusted for inflation. It hit Galveston Island, Texas, on Sept. 13, 2008, destroying 10 Gulf offshore oil rigs. All 22 Texas land-based oil refineries were shut down. Gas prices spiked to $5 a gallon. Ike was a Category 4 storm at its peak, but it had calmed down to a Category 2 by the time it hit Texas. The area had just been devastated by Hurricane Gustav, however. 
  8. Next was Hurricane Ivan. The Category 3 storm hit in 1992. When adjusted for inflation, its damage totaled $27.1 billion.
  9. Hurricane Wilma was ninth. This Category 3 storm did $24.3 billion in damage. It pummeled Florida in 2005 with winds as high as 120 miles per hour. 
  10. Hurricane Rita hit Louisiana and Galveston, Texas, in 2005. This Category 3 storm caused $23.7 billion in damage in inflation-adjusted dollars. Around 3.7 million residents of Corpus Christi were evacuated during a triple-digit heat wave. As many as 118 people died during the evacuation. Rita spawned 92 tornadoes. Storm surges flooded eight towns.

Top 20 Most Destructive Hurricanes

Here are the 20 most destructive storms to hit the United States. Seventeen of them have occurred since 2000, further proof of the worsening impact of climate change.

Rank / Name / States / Year / Category / Damage in Billions Not Adjusted and Adjusted for Inflation 

1

Katrina

FL, LA, MS

2005

   3

$125.0

   $160.0

2

Harvey

TX, LA

2017

   4

$125.0

   $125.0

3

Maria

PR

2017

   5

  $90.0

     $90.0

4

Sandy

NY, NJ, MA 

2012

 TS

  $65.0

     $70.2

5

Irma

FL

2017

   5

  $50.0

     $50.0

6

Andrew

FL, LA

1992

   5

  $27.0

     $47.8

7

Ike

TX, LA

2008

   2

  $30.0

     $34.8

8

Ivan

AL, FL

2004

   3

  $20.5

     $27.1

9

Wilma

FL

2005

   3   

  $19.0

     $24.3

10

Rita

LA, TX

2005

   3 

  $18.5

     $23.7

 11

Florence

NC

2018

   1

 $17-$22

 $17-$22

12

Charley

FL

2004

   4

  $16.0

     $21.1

13

Irene

NC

2011

   1 

  $13.5

     $14.9

14

Matthew

SE US

2016

   1

  $10.0

     $10.3

15

Frances

FL

2004

   2

    $9.8

     $12.9

16

Allison

TX

2001

 TS

    $8.5

     $11.8

17

Jeanne

FL

2004

   3 

    $7.5

       $9.9

18

Hugo

SC

1989

   4

    $7.0

     $14.1

19

Floyd

NY, MA

1999

   2

    $6.5

       $9.6

20

Gustav

LA

2008

   2

    $6.0

       $6.9

Top Five Deadliest Hurricanes

The deadliest U.S. hurricane occurred in 1900. This Galveston, Texas hurricane killed between 8,000 and 12,000 people.

The Okeechobee Hurricane in 1928 killed more than 3,000 people. The Category 4 storm hit Puerto Rico, then Palm Springs, Florida. More than 18 inches of rain flooded Lake Okeechobee. The Herbert Hoover Dike was later built around the lake to prevent future flooding.

Hurricane Maria was the third deadliest, killing 2,975 people. Hurricane Katrina was fourth, with 1,833 dead. The Cheniere Caminada Hurricane of 1893 killed 2,000 people, including 1,400 people in a Louisiana fishing community.