The economic impact of Hurricane Ian

Hurricane Ian made landfall on the southwest Florida coast on 28 September 2022 as a strong Category 4 storm. Severe flooding and widespread damage occurred from the Naples-Immokalee-Marco Island metropolitan area north toward the Tampa metro area. The storm then moved northeast across the state, leaving behind damaged infrastructure and flooding from Orlando to the Deltona-Daytona Beach metro area. The hardest-hit areas of the state account for nearly 15% of Florida GDP and around 0.8% of US GDP. The broader affected area of the state accounts for almost 60% of Florida output and 3% nationally.

Hurricane Ian will have a noticeable impact on near-term GDP growth in Florida but only a slight impact at the national level.

The storm will shave 1.5-2.0 percentage points off Florida's real GDP growth in the third quarter. Our September forecast, released before the storm, called for third-quarter growth of 1.9%. Recovery efforts and a return to normal business activity will allow Florida's real GDP to accelerate in the fourth quarter. Nationally, real GDP growth will be reduced by 0.1 percentage point in the third quarter.

The hardest-hit areas included the Cape Coral-Ft. Myers, Punta Gorda, and Naples metropolitan areas.

These areas account for over $150 billion of annual economic output in Florida, nearly 15% of the state's economy. Lesser-impacted areas account for another $450 billion of economic activity. Further north, the Tampa metro area escaped a direct hit and appears poised for a quicker bounce back. Recovery and repair in and around Fort Myers and Naples will take longer as infrastructure and residences are rebuilt. Fortunately, Florida's largest metros avoided the worst of the storm, mitigating the overall impact on the state.

Consumer spending will rise as rebuilding efforts commence.

The COVID-19 pandemic has shown the viability of remote work for those able to work from home given electricity is turned back on. Spending on property repair and durable goods like appliances will boost the area's construction and retail sectors. Nevertheless, missed economic activity from cancelled hotel bookings and vacations, closed restaurants and bars, and damage to Florida's already weak citrus crop cannot be recovered.

Florida has been one of the top-performing states following the COVID-19 pandemic

Recovery efforts will boost spending in the fourth quarter and into 2023 as homes and businesses are rebuilt and damaged infrastructure is repaired and replaced. Given the timing of the storm, many impacts will not be visible in the economic data. Employment data for September were gathered prior to the hurricane's arrival, and most businesses will likely retain their workers by the time October data are gathered toward the middle of the month. Florida is, unfortunately, accustomed to hurricane recovery efforts and will show resilience in the coming months.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.