No Q3 GDP Boost: Hurricane Arthur Weakens To Category 1, Moves Away From East Coast

Tyler Durden's picture

Anyone hoping for a resolution of the biggest economic conundrum of modern times will have to wait. What is the conundrum you ask? Simple: whether or not extreme adverse weather is positive or negative for GDP.

Recall that in the aftermath of Hurricane Sandy in October 2012, which caused some $70 billion worth of damages, the tenured econo-intelligentsia rushed to point out the silver lining, noting that courtesy of the idiotic broken window fallacy, at least US GDP would benefit. It is unclear if GDP did benefit, considering the latest Q4 2012 GDP print came barely at 0.1% suggesting ex-Hurricane GDP would have been negative. However what is clear is that the collapse in US GDP in Q1 2014 to -2.9% has not been blamed on Obamacare, or the collapse in global trade, or the ongoing decline in real wages, or the demise of the US middle class, or the fact that the US economy is still in a depression if one takes away the $10+ trillion injected by global central banks, and was instead blamed on "harsh weather."

In other words, extreme weather conditions are positive to GDP if the lead to a lot of broken windows, but very negative if they result merely in people spending excessively on heating and warm winter clothing.

Hence conundrum.

So it was hoped that Hurricane Arthur, which made landfall overnight on the North Carolina coast, would provide some clarity, based on what happens to Q3 GDP because remember: after Q1 and Q2 GDP, originally expected to rise by over 2.5% have now tumbled, the great hope is that the "escape velocity" economic surge, originally penciled in for Q2 2013, then Q3, then Q4, then Q1 2014, then Q2 2014, would finally take place in the second half of 2014. Of course it won't, because there is no economic recovery to speak of - there is simply propaganda to make the record Dow Jones appear modestly credible although lately even CNBC is largely laughing when trying to justify the 17,000+ print with the actual state of the economy - but at least a hurricane would be a great scapegoat to "explain" the latest delay to the "self-sustaining" recovery (recall that according to JPM, instead of "above-trend" 2.8% growth in 2014, the US economy is now expected to grow at the slowest pace since 2009). Or, alternatively, Arthur would have been just what the window breaking doctor ordered.

In any event, it appears that any expectation Arthur would devastate the east coast, with either positive or negative GDP consequences, has been cancelled. Because not only has Arthur just been lowered to a Category 1 hurricane from 2, but now appears to be moving away from the east coast entirely.

From CNN:

Arthur weakens to a Category 1 hurricane with maximum sustained winds of 90 mph.


North Carolina seems to have dodged a bullet. Hurricane Arthur did not dawdle over the coastline to vandalize neighborhoods for long. The storm accelerated its rapid trek north, the National Weather Service said, and was leaving land behind as the sun rose.


Once again, it's churning over the Atlantic on a water-bound path parallel to New England's coast.  A line of rain clouds is sweeping east overland to meet the hurricane as it climbs, dumping rain all the way up to Maine on Friday, downing trees and knocking out power long before Arthur is to arrive.


As Arthur leaves the South's shores, hurricane watches and warnings are vanishing and resurrecting, as tropical storm warnings are posted farther north in anticipation of the storm's gradual demise around Nova Scotia.


When Arthur came ashore with 100-mph winds at 11:15 p.m. Thursday, Robin Nelson's house clattered and rumbled. She was right in the path of the eye wall.


The Category 2 storm made landfall between Cape Lookout and Beaufort, North Carolina, the National Hurricane Center said.


Nelson lives with her husband and two sons in Newport, right across the Newport River Sound from Beaufort.

And from NYT:

Hurricane Arthur began pushing away from the North Carolina coast on Friday morning after battering the shoreline with heavy rains and strong winds.


As the storm moved back into the Atlantic, the extent of any damage along the state’s coastline and areas just inland was unclear, and forecasters said the storm could threaten New England later on Friday.


At 7 a.m., the National Hurricane Center in Miami said that Arthur was powering its way offshore at 23 miles per hour. The hurricane had maximum sustained winds of 100 miles per hour, and its center was 65 miles east-northeast of Kitty Hawk. Although the storm was set to churn far from the American coastline for most of the day, forecasters said it could lash the Massachusetts coast with heavy rain on Friday night. A tropical storm warning was in place for Nantucket and Cape Cod, and forecasters extended it early Friday as far west as Woods Hole.

Still, there is some hope for a GDP "boost" however tiny: "Utility companies reported thousands of power failures. Tideland Electric Membership Corporation, which provides service in the Outer Banks, said more than 7,700 of its customers were without electricity early Friday. And Duke Energy reported that more than 11,000 of its customers in Carteret County, where Arthur made its landfall, lacked electricity."

As for billionaire hedge funders hoping their weekend Hamptons retreat, where they impress 20 year old girls with the size of their mansions, will be sunny and bright, the following latest trajectory map from the NHC should provide the answer.

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buzzsaw99's picture

sorry n. carolina, no $andybux for you!

RevRex's picture

Obama did say we were going to get hit with some vicious Hurricanes this of course it's a lie

NotApplicable's picture

Oh, no, not good weather! That'll ruin everything.

Happy "Overthrow The Government Day!"

nmewn's picture

Krugman: Damn, we were really counting on all that devastation to "save or create" millions of transient jobs!

BLOTTO's picture

Someone lost the remote control for the hurricane...

max2205's picture

Long Iceland for a direct hit

BigJim's picture

The broken window fallacy is dead! Long live the broken shingle fallacy!

Reaper's picture

Krugman wept and cried out to his lord, "where's the cat 5 you promised."

G.O.O.D's picture

No shit nmewn, now what are we going to do with all those san salvadorian children?  I mean after we feed the reptillians, there is still going to be leftovers.

Sudden Debt's picture

We're going to get tennisball hail again tonight and so will tomorrow night.

Never happened before and now already for the 3rd time in a month.

And believe me, it causes serious damages

G.O.O.D's picture

Do the labradors try to fetch it?

J S Bach's picture

But, but I thought the powers-that-be controlled these things using HAARP?

Maybe they're re-directing it to the City of London.

CPL's picture

Ever try planting strawberries in December in the snow? 

It works out about the same as making a hurricane happen mid summer.  Need lots of stored heat in a large body of water over the summer to make one happen in late summer/early fall.  If there isn't enough energy in the water, then it fizzles out fast because it cools it's own energy source, the heat from the water.

valley chick's picture

Exactly.  Usually the month of September is when we see some real kick  ass hurricanes, however, each one is destinctive as for example, hurricane fran was more wind  versus hurricane floyd was more rain.  Never will forget hurricane floyd as many lived in fema trailers that later were noted as being a health issue. Along with the rivers cresting and wiping out entire shopping centers.

Fuh Querada's picture

Recently HAARP has been a guarantee for an orgy of downvotes. I wonder why.

IndyPat's picture

Because there are only 4-5 actual humans on here. The rest are .gov code.

Ask yourself why Edison is War-Shipped and Tesla is relegated to nutter stats.

The F.B.I. didn't swoop in, snatch all Teslas documents and classify them cause they were Kookieville.

Flakmeister's picture

What is it with the HAARP meme?

It is such ludacrous nonsense and it isn't even funny after the "joke" has been used 10,000 times...

Are you trying to be funny or, god forbid, you actually believe a few micro watts/cm2 can amounts to anything?

J S Bach's picture

Shirley, you can't be serious?!

Totentänzerlied's picture

It seems like only yesterday Flakmeister was promising all our Keynesian window-breaking fantasies would soon be realized in Arthur ... because it was:

You should submit your CV to Deutsche Bank, maybe they could use another LaVorgna.

Flakmeister's picture


You must be drowning, those straws you are clutching at are pretty weak...

PS It did max out at Cat2...

kchrisc's picture

HAARP is so annoying and I guess funny.

When some of my buddies switch to pontificating about HAARP, I have to just laugh.

I have tried explaining to them scale-up differentials, dissipation rates of broadcast energy, adiabatic processes and lapse rates, the high heat capacity of  water, cloud condensation nuclei, etc. Doing so only makes them laugh.

Oh well, one can only try.

Calmyourself's picture

Never happened before... Are you ten thousand years old?

CheapBastard's picture



No Damage....

Very bearish.

G.O.O.D's picture

Quick, short Home Depot.

Eyeroller's picture

Nothing is bearish anymore.

No destruction, no damage = bullish

Massive destruction, massive damage = DOW to 20,000!

Handful of Dust's picture

The market can only hope things oveseas now take a turn for the worse to compensate for this weak hurricane.

Infinite QE's picture

HAARP in action. Just like on 9/11/2001.

Fuh Querada's picture

Yeah but mention that on ZH and you will be downvoted, like just now. I gave you +1.

neuronius's picture

+1 for having 9/11 and HAARP in the same post.

Calmyourself's picture

HAARP is shutdown must be chemtrails sarc..

G.O.O.D's picture

Oooookkk.. more tinfoil for you. I use the turkey roster pans for the extra protection.

orangegeek's picture

Al Gore fixed it.


Thanks Al you fat bastard

ISEEIT's picture

Our leaders will be very angry. This hurricane would have been perfect for teaching the american sheeple that climate disruption is indeed real and as is the case with all enemies, requires the leadership to respond with an elaborately contrived matrix of taxes, killings, inprisonings, taxes, restrictions, killings, taxes and other measures all masterfully planned and executed so as to keep the sheeple safe.

G.O.O.D's picture

You left out taxes. R U stupid or something?

IndyPat's picture

No. They will make (Brawndo) Lemonade out of pure piss. Same as always. More miracles from Prince Petulant!

This is Indisputable Proof that Camacho's closing of coal fired power plants is fucking working! 100% of 3 scientist agree. Unanimously so. Terrist flat earther birther 9/11 wackadoodle if you suggest otherwise!

Hurricanes aren't the only thing that spin.

Camacho and Flak do it like Dervishes.

kchrisc's picture

Great comment, except you used "our leaders" instead of "treasonous sociopathic scumbags that think that they are our leaders."

Little Boomer's picture

I believe that just the mere threat ot this Climate Change induced event will be enough to tip our robust recovery in to the Oabamacare Recession.

d edwards's picture

Damn! Bet there were a lot of "economists" and other number manipulators who were all set to blame a lousy Q3 on ol' Authur!

Seasmoke's picture

Looks like an awful 4th of July holiday at the Krugman household. 

world_debt_slave's picture

even the hurricane knows how fucked up this country is and is hightailing it outta' here

G.O.O.D's picture

Well shit The guy that posts is not working today either. I guess I'll get shitfaced and fall down alot.

Smegley Wanxalot's picture

Oh fuck, it weakened?  We need the destruction and death so we can have shit to rebuild and graves to dig  and provide economic value, or something.

Oleander's picture

Flash flood warnings here. Up to 6 in. Per hour localized and 2-4 inches area wide. Could wash out some roads! Just had some thunderstorms in the area so all is not lost. 

G.O.O.D's picture


IndyPat's picture

Give NC Operation El Niño (TM) instead.

Divert the 5 C-130s full of Ebola and Lice ridden beaner babies bound for Boston and land em in Charlotte. Problem created...and solved at the same time per the formula.

You're welcome, Camacho. And I didn't even go to Harvard!

Not that he did either, on second thought...but you get my gist.

NoWayJose's picture

A big hurricane is like being in a war. The devastation far exceeds any bump to GDP on the other side. Ask New Orleans or Long Island. Even 'rebuilding' is not a positive for GDP because it sucks money from the insurance companies - and they get that back by raising rates all over the country. Yet some economists think we need WWIII?

Atomizer's picture

Climate disruption downgraded hurricane. 

TheAnswerIs42's picture

A good description of what is driving this Hurricane season (by the great Joe Bastardi) can be found here.

Hint: The situation is similar to the 1950's when the North Atlantic was cooling and pushed the warm water back down into the lower Atlantic.

You can read his forecast for Arthur here. Turned out to be right on the money.

His forecast for the 2014 Hurricane season is here.


CaptainSpaulding's picture

Its still raining. Looks like i will have to break out George Foreman to cook my fat greasy fuckburgers