The CBS “Evening News” may want to change its theme music to R.E.M.’s “End of the World As We Know It.”
Nearly two months into a quiet hurricane season, CBS’s Michelle Miller alarmed viewers of the July 30 broadcast with ominous warnings of a “long overdue Northeast hurricane” that “could devastate the region and cripple the U.S. economy.”
Invoking the “Long Island Express” hurricane of 1938, Miller warned that as devastating at that storm was in lives lost and property damage, the economic hit today would be much worse, as “real estate values from Maryland to Maine are among the highest in the nation.”
Even so, later in her story, Miller conceded that the economic forecast assuming the hypothetical worst case scenario was far from unanimous. “Opinions are split on whether the insurance industry and the U.S. economy could withstand a $200-billion blow,” she conceded.
Yet Miller failed to include a sound bite from an economist or finance expert who explained why he or she thought the economy could weather the aftermath of a hurricane slamming Long Island.
Miller also left out recent history, which suggests the economy could recover quickly after a hurricane – perhaps even coming back stronger.
For example, on July 26 Reuters’s Peter Henderson [1] reported that less than one year after Hurricane Katrina devastated New Orleans, the Big Easy has shown strong recovery in two industries vital to that city’s economy.
“Economist and University of New Orleans Chancellor Timothy Ryan said more than 78 percent of tourism jobs were back,” while “the number of oil and gas jobs in the local economy was 20 percent higher than before Hurricane Katrina hit,” reported Henderson.
Indeed, economic forecasting in the wake of hurricanes can be tricky. Writing in the Sept. 7, 2005, BusinessWeek [2], Michael Englund of Action Economics forecasted that third-quarter GDP growth for 2005 would “lower the expected U.S. growth rate to 3.7%” and lower growth in the last three months of 2005 to 3.9 percent. Englund added that “we forecast positive effects of 0.2 to 0.5 percentage points in each of the four quarters of 2006.”
In fact, the economy outperformed Englund’s expectations in the third quarter by 0.5 points to clock in at a 4.2-percent growth rate. While it slowed to 1.8 percent in the fourth quarter, it registered at a strong 5.6 percent rate in the first three months of 2006.
What’s more, State University of New York Suffolk Professor Scott Mandia [3] noted that “one positive economic outcome of the 1938 Hurricane was that it effectively ended the unemployment experienced near the end of The Great Depression” as “thousands of people flocked to Long Island in search of clean-up work and repair.”