Weather experts on Thursday agreed about what many have been fearing: the inevitability of Hirricane Irma unleashing its wrath on the Florida Keys and Miami on Saturday.
Irma is considered even stronger than the Houston and Gulf Coast-centered Hurricane Harvey, whose negative impact on the economy has been estimated by Accuweather at $160 billion.
Irma, which flattened Barbuda and battered the Virgin Islands and Puerto Rico, continued to cut a deadly swath across the Caribbean, as Cuba and the Bahamas on Thursday braced for the storm.
The category five Irma, which is estimated to have impacts of $1.45 billion on retail due to lost sales, could hit Orlando, Jacksonville and Tampa if it continues on its course. Harvey, a category four storm, dumped up to 50 inches of rain on parts of Houston, causing catastrophic and record-breaking flooding, will initially have negative impacts of $1 billion on retail sales.
“Florida is going to get hit hard,” predicted Peter Mullinax, meteorologist at Planalytics. “There’s general agreement that significant impacts are coming to South Florida. Irma, remarkably, has remained a category five hurricane for 38 consecutive hours. That’s incredibly abnormal. No tropical cyclone on the globe has been able to sustain category five status for that long.”
Irma could affect more people than Harvey, if the large Florida cities and parts of neighboring states are impacted. The storm has driven winds of up to 165 miles per hour and dangerous storm surges of up to 20 feet in some places.
Irma hasn’t even arrived in the U.S. yet, but there are traffic jams in Atlanta as residents of the Keys flee north. Colleges in Georgia and North and South Carolina have closed and ships are being asked to divert away from ports.
Craig R. Johnson, president of Customer Growth Partners, said anecdotes from the company’s team in Dade and Palm Beach Counties in Florida include “water/gasoline mostly all gone by midday Wednesday, empty shelves at some stores, and fights at Costco over bottled water.”
“We’re working with store teams and asking them to work with customers to make sure they have a safe shopping experience, and that our associates have a safe experience on the selling floor,” said a Wal-Mart Stores Inc. spokesman. “All-hands-on-deck to find out information in real time. Whether stores close will depend on the next landfall; it could directly impact 400 units. We’re focused on Florida, Georgia and the Carolinas.”
Wal-Mart, which operates more than 400 Wal-Mart stores, Sam’s Clubs and Neighborhood Markets in the region, is “switching gears from Texas central operations teams to Florida operations teams. We realize water is the main the focus of outages,” the spokesman said. “We’re working with our suppliers and distribution centers. We began pushing water into the impacted zones in the state of Florida and potentially, up the coast.”
“Target has a longstanding commitment to supporting our team and communities before, during and after disasters,” a spokeswoman for Target Corp. said. “Our teams across Florida are currently preparing for the impact of Hurricane Irma. This week, we’re providing stores with additional supplies that we know our guests need to stock up, including water, batteries, flashlights, toiletries, camping supplies, cleaning supplies and nonperishable food. We’ll continue to push as many products to our stores as we safely can before the hurricane hits. We anticipate that Target stores will close this weekend and we’ll provide a store closure list once it’s available. We’ll work to reopen stores as quickly as possible, and have supply chain teams preparing to restock needed supplies as quickly as we can after the storm passes.”
Stores overindexing in Florida, according to Johnson, include Chico’s, Oxford’s Tommy Bahama and Lilly Pulitzer brands, and REITS such as Simon Property Group, which operates 23 shopping centers and outlet malls, and GGP, with seven malls in the state. In addition, privately held Turnberry Associates’ Aventura Mall; Whitman Family Development’s Bal Harbour Shops; Swire Properties’ Brickell City Centre, which is managed by Simon, and the Forbes Companies’ Gardens Mall are also are overindexing with anchors such as Nordstrom, Saks Fifth Avenue and Neiman Marcus located in many of the centers.
The fate of South Florida could turn on as little as 10 miles. But even if Irma’s path shifts, the storm is so strong it could “maintain major hurricane status until Sept. 11 near Orlando and Sept. 12 Columbia, S.C.,” Mullinax said.
“In addition to the death and devastation caused by Hurricane Harvey, the disruptions from the storm and subsequent rebuilding will increase the volatility of U.S. economic activity over the next few quarters,” said IHS Markit chief economist Nariman Behravesh. “Unfortunately, another monster hurricane, Irma, threatens Florida and the East Coast, which could add substantially to the human and economic tolls on the nation.”
Behravesh said it’s still too early for a full damage assessment of Harvey, but he sees it being the second- or third-costliest hurricane in recent U.S. history, estimated at $60 billion to $100 billion.
“Exports of petroleum and natural gas and derivative products will be hurt temporarily,” he said. “Inventories are likely to be drawn down as companies struggle to meet demand in the face of production disruptions. Inflation will rise temporarily, due to gas and chemical price spikes resulting from storm-related refinery and chemical plant shutdowns. The higher inflation will undermine consumers’ purchasing power.”
In light of weak July construction, declining rig count and the destruction caused by Hurricane Harvey, IHS Markit expects that annualized gross domestic product growth in the third quarter, previously estimated at 3.1 percent, will be cut by about 1.1 percentage points. Fourth-quarter growth, previously estimated at around 2.4 percent, will be bumped up by 0.4 percentage point. Growth over the first half of 2018, which was predicted to be 2.8 percent in the August forecast, will likely be 3.1 percent rate, with the proviso that damage from Hurricane Irma could exacerbate the growth volatility.