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