How Hurricanes Damage the Economy

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

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 vulnerable to hurricane damage. Coastal shoreline counties create 40% of America's jobs. They are responsible for 46% of its gross domestic product

Key Takeaways

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

It also estimates that government costs for hurricane damage are $28 billion a year. Florida contributes 55% of that, and Texas and Louisiana add 13% and 9% respectively. 

These 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 pays almost two-thirds of the government's bill. The Department of Housing and Urban Development 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 2020 Hurricane Season

The National Oceanic Atmospheric Administration (NOAA) predicts an above-normal hurricane season for 2020. On May 21, 2020, it forecasted 13-19 storms with winds of 39 miles per hour (mph) or more. Of those, 6-10 could become hurricanes, with winds of 74 mph or more. There could be 3-6 major category 3 or greater hurricanes, with winds of 111 mph or more.

The Atlantic hurricane season runs from June 1 to November 30 each year.

The 2020 hurricane season comes in the midst of the COVID-19 pandemic. Disaster preparedness plans must also include masks and social distancing.

The 2019 Hurricane Season

The  NOAA reported that the 2019 season had 18 named storms. Six of them were Category 3, 4, or 5. It was the fourth consecutive above-normal season. was predicts an average hurricane season in the Atlantic of four to eight hurricanes. Between two and four will become Category 3 storms or higher. NOAA expects that this year's El Nino will compensate for the higher ocean temperatures caused by global warming.

CoreLogic predicted that the season would put 7.3 million homes at risk of storm surge. Reconstruction cost is almost $1.8 trillion. The greatest risk is New York City and Miami, Florida. Potential damage to the New York area is $330 billion. That's almost double the potential cost to Miami of $166 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, 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 between $3 and $5 billion in wind and surge damage. According to Munich Re, the total cost was $16 billion. More than 1 million customers lost power. The hurricane hit Georgia as a Category 3 storm. 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 that 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 miles 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. Around 30% of the population lost power. On Sept. 20, it devastated Puerto Rico, 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. Another 4,645 people died after the storm knocked out electricity, cell phone towers, and transportation. Maria weakened a dam, forcing 70,000 people to evacuate. Around 15,000 people were forced into government shelters. The island will receive $50 billion in FEMA payments. This is for public works, individual assistance, and rebuilding. Insurers estimated their costs to be $85 billion.
  • Hurricane Irma: Hurricane Irma was the most powerful Atlantic hurricane in recorded history. The 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 the 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

Hurricane damage occurs from seven sources: high winds, storm surge, extreme rainfall, location, time of year, preparedness, and global warming.

High Winds

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

Category Wind Speed Surge in Feed Damage Home Damage Tree Damage Power Outages


74-95 mph







96-110 mph







111-129 mph







130-156 mph







157+ mph






Storm Surge

Storm surge is 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

The second source 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 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.

Hurricanes lose power when they make landfall. That's because they are without the warm moist ocean air that feeds them. 

Time of Year

The 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. 


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

Since 1880, the earth’s average temperature has risen about 1 degree Celsius or 1.9 degrees Fahrenheit. That's created higher ocean temperatures at deeper depths which feeds hurricane strength. Warmer air holds more moisture, allowing greater rainfall during a hurricane. The 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.

A 2018 study found that hurricanes have slowed by 10% since 1949. The jet stream that pushes them is becoming weaker. It's driven by temperature contrasts between the Arctic and temperate zones. But the Arctic is warming faster than the rest of the globe. That allows hurricanes to hover over one area and create more damage.

According to M.I.T. models, global warming and increased incomes will cause hurricane damage to quadruple by 2100. Half of that increase comes from more people building along coastlines. The other half was from warmer temperatures caused by climate change.

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 of these losses were a result of flooding in New Orleans. 
  2. Harvey, a Category 4 storm when it hit Texas, cost $125 billion.
  3. Maria inflicted $90 billion in damage. 
  4. Hurricane Sandy caused $70.2 billion in damage when adjusted for inflation. Sandy hit New Jersey on Oct. 29, 2012. It combined a 990-foot wide hurricane, a cold front, and storm tides 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, a Category 5 storm, cost $50 billion. 
  6. Hurricane Andrew was a Category 5 storm that hit Florida in 1992. It destroyed $47.8 billion worth of property 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.
  8. Hurricane Ivan, a Category 3 storm, hit in 1992. When adjusted for inflation, its damage totaled $27.1 billion.
  9. Hurricane Wilma, a Category 3 storm, did $24.3 billion in damage when adjusted for inflation. 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 heatwave. 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 (B$) Damage

Adjusted for Inflation













































































































































Top Five Deadliest Hurricanes

The deadliest U.S. hurricane occurred in 1900. It hit Galveston, Texas, killing 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.

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