Markets Are Signaling That Hurricane Harvey Won’t Crush the Economy
And despite the Texas Gulf Coast’s central role in American energy production, oil prices are not exhibiting the kind
of spike they did after Hurricane Katrina in 2005; the price of West Texas intermediate crude fell Friday and Monday.
Bond prices are also little changed; if investors expected lasting damage, they would most likely would have bid up bond prices, seeking safety
and anticipating a slower pace of interest rate increases from the Federal Reserve.
If you look at the overall data from that year for those
and other affected commodities, though, there’s not much evidence of any lasting problems, reflecting the ability of corporate supply chain and logistics managers to find other ways to get products to market.
But when you pick apart the ways a disaster — even a huge one — can affect the overall economy,
it becomes clearer why financial markets and economic forecasters are so sanguine.
In theory, a natural disaster could deliver such severe losses to insurers, banks
or other financial institutions as to cause broader economic problems.
That benign view of the economic impact of the storm is the immediate verdict of financial markets
Monday, which showed no signs of expectations that there will be broad ripple effects.
