Studying the impact of tornadoes
On April 29, we wrote this about the devastation wrought by the late April tornadoes:
"Historically, the economic pattern of disasters sees initial losses as affected areas experience a slowdown in activity. The duration of the slowdown is tied to the extent of damage in economically important areas, and the duration of loss of services such as power and water. Recovery is driven largely by two factors—physical rebuilding of damaged and destroyed infrastructure and replacement of capital and household goods. As insurance checks are distributed and government aid is delivered, the economic recovery begins to take hold. Rebuilding infrastructure and replacement of capital and goods can stretch out several years, depending on the extent of the damage."
A recent study titled Preliminary Economic and Fiscal Impacts of the April 27, 2011 Tornadoes on Alabama by our friends Samuel Addy and Ahmad Ijaz at the University of Alabama's Center for Business and Economic Research reached a similar conclusion. Here are their overall conclusions:
"For the Alabama economy, the April 27 tornadoes will initially reduce GDP by $835 million to $1.3 billion or 0.5–0.7 percent, employment by about 5,600–13,200 jobs or 0.2–0.5 percent, state tax collections by $19.1–44.5 million or 0.2–0.5 percent, and local sales tax receipts by $4.4–10.2 million in 2011. Recovery activities (cleanup, assistance, and rebuilding) should pump $2.6 billion into the state economy in 2011 and $1.6–3.2 billion in 2012; state spending of about $80–100 million for cleanup in 2011 is expected. The federal government and insurance claims will fund most of the recovery. Cleanup and assistance should be completed in 2011, but rebuilding will continue into 2012."
The authors also note that the study does not take into account the "other very important quality of life factors such as lives lost, displacement, mental and physical health issues, and disruption to the lives of people who were not direct victims."
Driving home from Huntsville a couple of weeks ago, I went through the town of Rainsville, Ala. I was unaware of the tornado that ripped through that small town, but I'll never forget the aftermath. This past weekend I was in Ringgold, Ga., and saw similar damage. But the people of these towns are clearly resilient—cleanup was evident, and even some rebuilding was under way.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
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