Goldman Sachs warns that LA wildfires could significantly affect the US economy and job market
Goldman Sachs is calling this one of the 20 costliest natural disasters in US history. They’re looking closely at how these fires will hit the economy and job market.
Early estimates suggest insured losses could hit $30 billion, while total economic losses might soar to $275 billion. That’s a staggering amount.
Goldman Sachs predicts that the first-quarter GDP growth could drop by 0.2 percentage points. This doesn’t even factor in the usual rebound that follows such disasters.
In terms of jobs, they expect a slight dip of about 15,000 to 25,000 jobs due to the fires. But since only a small fraction of California is under evacuation orders, the overall impact might not be as severe.
They also don’t foresee a big spike in unemployment claims related to the wildfires. Their data shows no significant increase in online searches for unemployment benefits since the fires began.
Inflation has been a hot topic lately, but Goldman Sachs doesn’t think the wildfires will push insurance costs high enough to affect inflation rates significantly.
Their analysts believe that the impact on prices outside California will be limited, especially since homeowners’ insurance only makes up a tiny part of the overall inflation index.
Jeffrey Mezger, the CEO of KB Home, echoed this sentiment, saying the rebuilding efforts shouldn’t cause a labor or material shortage.
However, with the Eaton and Palisades fires still not fully contained, there’s a lot of uncertainty about the final damage figures, both insured and uninsured.
