Sept. 27, 2017

Analysts Forecast Harvey, Irma Impact at MSCI Economic Summit

Metal industry leaders gathered in Schaumburg, Illinois, earlier this month to discuss the major economic factors and policies affecting the industrial metals supply chain. Among the many items discussed during the annual summit was how hurricanes Harvey and Irma might affect the economy overall and the different end markets served by the metals industry.

According to Michael Gregory, managing director and deputy chief economist at BMO Capital Markets, more than 10 percent of the U.S. economy was impacted by either Harvey or Irma. Gregory, who kicked off the conference with his economic outlook for 2018, said those storms will have far-reaching economic implications for the foreseeable future.

“As economists, we ask, ‘what does it mean for growth?’ First, there’s an awful lot of economic damage and together, these hurricanes might be the largest we’ve ever had in terms of economic damage,” Gregory said, pointing out the number of homes, cars and products like air conditioners that were damaged or destroyed during the storms. “All of these things are going to have to be replaced, and that will add to economic growth going forward.”

In terms of GDP numbers, Gregory expects to see the effects of the rebuilding effort as soon as the fourth quarter and anticipates it lasting well into the upcoming year. Overall, he’s predicting low 2 percent GDP growth but thinks the recovery effort could bring several quarters of 3 percent or higher.

However, Gregory notes that GDP numbers in the third quarter will be negatively impacted by Harvey and Irma, and industry executives seemed to support that outlook. “Harvey and Irma certainly put a damper on our business for the last couple of weeks,” said Michael Petersen, CEO of Petersen Aluminum Corporation, which has facilities in Texas and Georgia.

Additionally, the rebuilding that must take place in areas affected by the storms will subtract from the already low number of available construction workers in the U.S. According to analysts, this will impact everything from housing to commercial development in 2018.

“Shortages in construction workers in that industry is making it very difficult for housing to expand a lot,” Gregory said. “This is something that we’re going to have to reckon with as we get a lot of building and construction in the hurricane-affected areas.


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Monday, December 18, 2017