In this week’s Economic Report, Dr. Rick Harper reviews where the region is ‘10 years on from Hurricane Ivan.’ The devastating storm struck the Florida-Alabama gulf coast, coming ashore at Gulf Shores, Alabama on September 16, 2004.
In an article written for the Studer Institute’s blog Progress + Promise, Harper chronicled a review of Ivan’s impact on the region. The Haas Center for Business Research and Economic Development at the University of West Florida estimated at the time that more than $5 billion in buildings and other infrastructure were destroyed by Ivan. “And, of course that’s not counting the lost tourism revenues the next summer,” says Harper, noting the large amount of room inventory lost on Pensacola Beach and Navarre Beach due to the storm.
According to Harper, the flow of spending to buy items such as plywood, carpet, air conditioners during the rebuilding process takes economic activity to boomtown levels. “The paradox is that hurricanes destroy our wealth and make us worse off while stimulating spending that partially offsets the destruction” he says.
As an example of the post-Ivan economic boost, Harper points to sales tax revenues. “What we found was typically an increase of about 20-30 percent in retail sales that persisted each and every month, really for about 12-18 months following the storm,” he says.
An analysis showed that the same was true for Charlotte County, which was hit by Hurricane Charley in August of 2004.
These sales increases were larger for big ticket items such as home fix-up and automotive sales.
Surprisingly, Harper says Ivan’s impact on housing starts and housing sales was fairly muted. “Really, the effect of Ivan was lost in the bigger run up to the Florida real estate housing boom,” which Harper says had just taken root in 2003 and persisted through 2006.
Harper notes a short, but sharp, downturn in activity related to closings and in starts from September - November 2004, associated with Hurricane Ivan. He says where we are today, after the housing boom and bust, housing starts are still not back to where they were in the 1990's and early 2000's.
Dr. Rick Harper is director of the University of West Florida Office of Economic Development and Engagement and is also director of the Studer Institute. email@example.com.