Economic Activity in the U.S. After Hurricane Irma
October 2017The U.S. economy shows no signs of slowing down, despite the impact of two major hurricanes that hit U.S. mainland within two weeks of each other. Damage done by high winds and rampant flooding in Texas and Florida (the 2nd and 4th largest economies in the U.S.) was forecasted to negatively impact third-quarter economic activity but as of yet the U.S. economy appears to be more resilient than in the past.
According to the World Economic Forum, the U.S. gained in global competitiveness for the 2017-2018 Global Competitiveness Index. The U.S. is now ranking number 2 out of 137 countries, the highest it has been since the beginning of the 2008 recession. This report assesses the competitiveness landscape based on 12 pillars (1), which provides insight into the drivers of their productivity and prosperity. Another positive outlook for the U.S. economy has been the reduction in the trade deficit for August, decreasing the deficit by 2.7% from July 2017. The August trade deficit came in at $42.4 billion, which is the lowest it has been in 11 months.
Even with a loss of 33,000 jobs, mostly in the service and hospitality industry due to hurricane impacts, unemployment decreased yet again. At its lowest, since February 2001, the unemployment rate is now at 4.2%. Economists predict that the loss of the total number of jobs will quickly be rebound as the areas impacted by hurricanes get back to normal.
With manufacturing driving the U.S. economy, 17 of 18 manufacturing sectors have reported growth according to the Institute for Supply Management (ISM) Report on Business (2). Manufacturing expanded in September as the PMI (Purchasing Managers Index) registered at 60.8%, an increase of 2% from the August reading of 58.8% and the highest since May 2004 at 61.4%. The September PMI indicates growth for the 100th consecutive month in the overall economy and the 13th straight month of growth in the manufacturing sector. The largest growth can be seen in new orders, up 4.3% and production rose 1.2%.
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(1) The 12 pillars used to measure global competitiveness include institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
(2) The 18 manufacturing industries include: Textile Mills; Machinery; Nonmetallic Mineral Products; Transportation Equipment; Plastics; Rubber Products; Paper Products; Wood Products; Computer; Electronic Products; Food, Beverage; Tobacco Products; Chemical Products; Fabricated Metal Products; Miscellaneous Manufacturing; Petroleum; Coal Products; Apparel, Leather; Allied Products; Printing; Related Support Activities; Electrical Equipment, Appliances; Components; Primary Metals; and Furniture; Related Products.