The effects of Hurricanes Harvey and Irma on aggregate consumption

By |  October 20, 2017

Weather impacts have extended themselves into fall – not confined to early spring as in most years. Hurricanes Harvey and Irma, combined with some unusually wet areas in late spring, mean seasonal patterns will be disturbed throughout 2017. The impact on overall aggregate consumption is small but negative for 2017.

A large infrastructure program is less certain because now billions of dollars will be concentrated into Texas and Florida. This may dampen enthusiasm for billions more for a new infrastructure boost over the next few years. In our opinion, it delays but does not eliminate a big program.

In the meantime, many states will boost infrastructure spending on their own, helping 2018-19 public works. We show private demand leveling off and slightly declining for 2018 and into 2019. The basic reason for a slowdown in housing is high prices. We think prices have outrun buyers’ ability to qualify and pay the higher mortgage payments.

With rents also increasing rapidly, we will be caught in this plateau for years to come. Nonresidential demand will begin a slow multi-year decline in 2018 as structural changes in retail shopping and slower employment growth (we are at full employment) take their combined toll on new higher demand.

Even with these headwinds, total aggregate demand will remain high. Regionally, 2018 will be very diverse: Illinois, Louisiana, Delaware and Minnesota are doing well, while Wisconsin, Florida, South Carolina, South Dakota and Nebraska are not doing well.

Dr. David Chereb has many years of experience forecasting construction materials, and his web-based forecasting models have captured every major turning point in materials demand for more than 15 years. Chereb received his Ph.D. in economics from the University of Southern California. He can be reached at

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About the Author:

Allison Kral is the former senior digital media manager for North Coast Media (NCM). She completed her undergraduate degree at Ohio University where she received a Bachelor of Science in magazine journalism from the E.W. Scripps School of Journalism. She works across a number of digital platforms, which include creating e-newsletters, writing articles and posting across social media sites. She also creates content for NCM's Portable Plants magazine, GPS World magazine and Geospatial Solutions. Her understanding of the ever-changing digital media world allows her to quickly grasp what a target audience desires and create content that is appealing and relevant for any client across any platform.

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