How Hurricane Harvey Will Ripple Through the U.S. Economy

Wall Street Journal, Sep 8, 2017
by Josh Zumbrun and Sarah Chaney

Hurricane Harvey will distort measures of the U.S. economy in the weeks and months ahead, making it more difficult for economists and policy makers to gauge its trajectory at a sensitive time for the Federal Reserve.

Everything from jobless claims, which already surged in a report on Thursday, to gross domestic product and inflation will be knocked off course, with brief spikes across a wide range of reports, economists say. And that is before any impact from Hurricane Irma, which could devastate cities across the Southeast.

It will be hard to discern whether bad reports result from storm damage and then whether good reports owe to the effects of rebuilding. The Fed, already struggling with conflicting signals as it decides the path of rate rises, must look through even greater volatility in inflation and other reports. It could be well into 2018 before the effects of the storms have fully washed out of economic data.

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