How Hurricanes Damage the Economy

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

HurricaneA damaged home in Ortley Beach, New Jersey, caused by Hurricane Sandy, which made landfall near Brigantine, New Jersey, on October 30, 2012.
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 Aneese / Getty Images

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

The United States, with its thousands of miles of shoreline, is vulnerable to hurricane damage. The nation's coasts are important economic engines. According to the National Oceanic and Atmospheric Administration (NOAA), coastal shoreline counties create 40% of America's jobs. They are responsible for 46% of the nation's gross domestic product. When a major hurricane comes ashore, the effects ripple throughout the economy.

Key Takeaways

  • Hurricanes inflict serious damage with high winds, storm surges, and heavy rainfall
  • The three most destructive U.S. hurricanes were Katrina in 2005, and Harvey and Maria, both in 2017
  • Expanding coastline development and climate change could increase federal spending for hurricane damage costs in the coming years

Hurricane Damage

The Congressional Budget Office 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 loss of at least 5% of average income.

The CBO also estimates the annual cost to repair hurricane damage at $28 billion a year. These average annual damage costs are expected to increase to $39 billion by 2075. Of that gain, 55% will be due to increased population density and development along U.S. coastlines. The other 45% will be due to the effects of climate change on storm patterns and strength.

The 2020 Hurricane Season

In its August hurricane forecast update, the National Oceanic Atmospheric Administration (NOAA) predicted an "extremely active" hurricane season for 2020. The outlook, which revised the agency's prediction from May, forecast 19-25 named storms (winds of 39 miles per hour or more). The 25th storm arrived by Oct. 5, with nearly two months still remaining in the season. The NOAA warned that 7 to 11 of those storms could become hurricanes, with winds of 74 mph or more. There could be 3 to 6 major, Category 3 or greater hurricanes, with winds of 111 mph or more. The August update covered the entire hurricane season through Nov. 30, 2020.

The Atlantic hurricane season runs from June 1 to November 30. Storm damage tallies for 2020 storms haven't been included in NOAA's list yet.

The 2020 hurricane season comes in the midst of the COVID-19 pandemic. Disaster preparedness plans must also include mitigation of the risks of the disease.

The 2019 Hurricane Season

The NOAA reported that the 2019 season had 18 named storms. Six of them were hurricanes, and three were Category 3, 4, or 5. It was the fourth consecutive above-normal season. The three major hurricanes for the season were Dorian, Humberto, and Lorenzo. Four hurricanes made landfall in the United States: Barry, Dorian, Imelda, and Nestor. Weather forecasting firm AccuWeather estimated the total cost of 2019's storms was $22 billion.

The 2018 Hurricane Season

NOAA said that the 2018 season will be remembered most for Hurricanes Florence and Michael. There were 15 named storms and eight hurricanes, two above Category 3. An average season has 12 named storms, six hurricanes, and three major hurricanes. Florence and Michael caused $49 billion in damage.

The 2017 Hurricane Season

The 2017 hurricane season was particularly harsh. The season had 17 named storms, 10 hurricanes, and six major hurricanes (including Hurricane Maria, which devastated Puerto Rico and the Caribbean). The combined cost of three major hurricanes that landed on U.S. shores (including territories)—Harvey, Irma, and Maria—was $265 billion.

How Hurricanes Cause Damage

Hurricane damage and loss of life is caused by several factors: high winds, storm surge and storm tide, heavy rainfall, and inland flooding. Hurricane-generated rip currents and tornadoes can also cause destruction and loss of life.

High Winds

Hurricanes' high winds create a lot of damage. The Saffir-Simpson Hurricane Wind Scale puts wind speeds, damage inflicted, and potential length of power outages into five categories.

Category Wind Speed Damage Home Damage Tree Damage Power Outages

1

74-95 mph

Some

Some

Branches

Days

2

96-110 mph

Extensive

Major

Snapped

Weeks

3

111-129 mph

Devastating

Major

Snapped

Weeks

4

130-156 mph

Catastrophic

Severe

Toppled

Weeks to months

5

157+ mph

Catastrophic

Destroyed

Toppled

Weeks to months

Storm Surge and Storm Tide

Storm surge is the rise in water above normal high tide. The hurricane's high winds push the water up onto the shore. Storm tide is when the storm surge coincides with the normal high tide. Storm tide contributed to the devastation in New York and New Jersey during Hurricane Sandy. The force of a storm combined with the weight of water (1,700 pounds per cubic yard) is very damaging.

Heavy Rainfall and Inland Flooding

Another key source of damage is heavy rainfall. Hurricanes can drop up to six inches of rain per hour. Slower moving and larger storms can linger over an area and drop torrential amounts of rain. Hurricane Harvey dumped over 60 inches of rain during its four days over southeast Texas and southwest Louisiana.

These downbursts create floods. Flooding accounted for 59% of deaths attributable to hurricanes between 1970 and 1999, according to the Weather Prediction Center. Floods also ruin homes, vehicles, and property. 

Global Warming and Hurricane Damage

Since 1880, the earth’s average temperature has risen by a little more than 1 degree Celsius or 2 degrees Fahrenheit. That's created higher ocean temperatures at deeper depths which feeds hurricane strength. Warmer air holds more moisture, too, allowing greater rainfall during a hurricane. Finally, rising sea level increases flooding and worsens storm surges. Between 1880 and 2015, the average global sea level has risen 8.9 inches. 

Climate change can also cause hurricanes to remain in place longer, which can increase the rainfall experienced.

A 2018 study found that hurricanes have slowed their speed by 10% since 1949. One of the reasons may be that the jet stream that pushes storms east and back toward the Atlantic Ocean is becoming weaker. The jet stream is driven by temperature contrasts between the Arctic and temperate zones. But the Arctic is warming faster than the rest of the globe, narrowing the temperature difference between zones and reducing the jet stream's strength. The same change in temperature differential may also have slowed tropical wind patterns. Both effects allow hurricanes to remain in place over an area longer and create more damage.

Top 20 Most Destructive Hurricanes (1980-2020)

Here are the 20 most destructive storms to hit the United States. Eighteen of the storms have occurred since 2000, a further indication of the increasing impact of climate change.

Rank Name States Year Category Cost in Billions

1

Katrina

FL, LA, MS

2005

1-3

$170.0

2

Harvey

TX, LA

2017

4

$131.3

3

Maria

PR

2017

4

$94.5

4

Sandy

NY, NJ, MA

2012

TS

$74.1

5

Irma

FL

2017

4

$52.5

6

Andrew

FL, LA

1992

5

$50.5

7

Ike

TX, LA

2008

2

$36.9

8

Ivan

AL, FL

2004

3

$28.7

9

Wilma

FL

2005

3

$25.8

10 Michael FL 2018 4 $25.5

11

Rita

LA, TX

2005

3

$25.2

12

Florence

NC

2018

1

$24.5

13

Charley

FL

2004

4

$22.4

14 Hugo SC, NC 1989 4 $19.3

15

Irene

NC

2011

1

$15.8

16 Laura LA 2020 4 14.0

17

Frances

FL

2004

2

$13.7

18

Tropical Storm Allison

TX

2001

TS

$12.6

19 Matthew NC 2016 1 $10.9

20

Jeanne

FL

2004

3

$10.5

Source: NOAA. Costs in 2020 dollars, adjusted for inflation.

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