Hurricane Harvey to make mild dent in US economic growth

Barclays predicted a 1.0 to 1.5 percentage point hit, which was the most pessimistic call in the poll. (Representational Image.) Top News

US economic growth will take a mild hit in the current quarter from Hurricane Harvey that slammed into Texas, but the outlook for the coming year remained steady in the latest Reuters poll, suggesting lost output will likely be recouped. Harvey was the most powerful storm to hit Texas in more than 50 years, killing over 60 people and displacing more than 1 million citizens. It also forced a temporary closure of refineries and the governor of Texas said the damage was around $180 billion.

Asked about the impact of Hurricane Harvey on economic growth in the current quarter, the median forecast from 48 economists who answered an extra question was for a 0.3 percentage point hit to seasonally adjusted annualised growth.

But the impact was expected to be short-lived according to economists, who responded to the survey Sept 7-12 before and as another powerful storm, Hurricane Irma, ripped through the Caribbean and then Florida, killing more than 60, displacing and leaving millions of households without power.

Previously, major hurricanes like Katrina in 2005 and Sandy in 2012 had cost more than half of the GDP growth rate for the respective quarters the storms hit. But data following those storms also suggest that the U.S. economy was able to add solid job numbers and bounce back from government reconstruction efforts.

“A storm of this magnitude is likely to have negative near-term effects on nationwide economic data. If flooding remains disruptive for several weeks, we would expect a drag on non-farm payrolls, but the historical experience here is mixed,” said James Sweeney, chief economist at Credit Suisse. “The effect on GDP is even more ambiguous, since many costs of dealing with the storm actually boost growth, offsetting some of the lost income and output.”

President Donald Trump’s administration struck a deal with Democrats that includes $15.25 billion in aid for areas affected by Hurricane Harvey and other natural disasters. Still, the range of forecasts suggests not everyone is convinced of just a mild dent in growth. “Hurricane Harvey could pose a sizeable drag, given the presence of high-value-added energy sectors in the Gulf Coast region and the timing of the storm’s landfall,” wrote Michael Gapen, chief U.S. economist at Barclays, in a note to clients.

Barclays predicted a 1.0 to 1.5 percentage point hit, which was the most pessimistic call in the poll.

Despite that, the latest Reuters poll consensus was for the US economy to expand an annualized 2.6 percent in this quarter and 2.5 percent in the next. That was up a bit from the previous predictions of 2.5 and 2.4 percent for the respective quarters in the August poll as economists had already begun upgrading their growth forecasts for the current quarter before Hurricane Harvey struck.

But inflation expectations have been lowered slightly from the previous month, with the core PCE price index – the Federal Reserve’s preferred measure of inflation – not expected to reach the central bank’s 2 percent target at least until 2019.

The consensus is for core PCE inflation to average 1.4-1.9 percent in each quarters from the current through the end of next year. In the August poll, the predictions were for it to average 1.5-2.0 percent. Still, the Fed is widely expected to announce steps at its meeting next week to start shrinking its balance sheet, worth over $4 trillion.

The survey of nearly 100 economists showed the central bank is expected to raise the federal funds rate once more in the final three months of this year, to 1.25-1.50 percent. But 44 of 73 economists who answered an extra question said their conviction for another Fed rate hike this year has decreased. The remaining 29 said it had stayed the same. “We still have a December rate hike call, but recent developments are making the path to a December rate hike more narrow,” said Sam Bullard, senior economist at Wells Fargo.

That lack of confidence amongst poll participants is mainly driven by the divide among Fed policymakers on the outlook for inflation and future interest rate hikes.

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Delta Airlines to cancel about 800 flights

span.p-content div[id^=div-gpt] { line-height: 0px; font-size: 0px;} said it would cancel about 800 flights on Monday as it braces for Tropical Storm at its Atlanta hub. "is expected to bring to the Atlanta hub strong crosswinds that exceed operating limits on select mainline and regional aircraft," Delta said on Monday.
The number 2 US airline by passenger traffic, whose business is heavily dependent on operations at the Atlanta airport, said it was planning to resume service to airports in Irma, ranked as one of the most powerful hurricanes recorded in the Atlantic, hit a wide swath of over the past day. It is now a tropical storm with sustained winds of up to 70 miles per hour (110 km per hour).
Bigger rival American Airlines Group said on Sunday it would not resume commercial flights at its Miami Airport hub on Monday, but may operate flights to bring in staff and supplies.

Indian-Americans urged to raise USD 1 million Hurricane Harvey fund

“We are not putting a deadline on this … (There is) a whole list of boxes that need to be checked before we open airports again,” said Bill Begley, the airport system’s spokesman. Related News

The Indian diaspora in the US has been urged to raise USD 1 million to support relief efforts in the aftermath of Hurricane Harvey, one of the most destructive storms in American history that killed more than 50 people. The consul-general of India (CGI) in Houston in Texas, Anupam Ray, urged the community to coordinate their funding. “The idea is to consolidate the fund-raising efforts of the community and present an aggregated picture,” Ray told PTI.

“To show our commitment to, and support of, the greater Houston community, we would like to organise a fundraising effort to support the mayor’s fund for Hurricane Harvey Relief and Rebuild Texas Fund by Governor Greg Abbott,” he said, adding that they have set a goal to raise USD 1 million. Harvey which hit the US Gulf coast last week brought the heaviest rainfall in American history, soaking Texas with more than 52 inches and forcing thousands of people out of their homes.

Indian Americans in Houston met at the Indian Consulate after Ray’s appeal. Ray explained the two funds set up by the governor will allow the Indian-American community to track their contributions through a code. He indicated that the idea is to build a strong “Indian brand”. The three Indian oil companies with offices in Houston – GAIL, Oil India, and ONGC – had committed USD 10,000 each.

Michael , founder and CEO of Dell Computers, declared he will donate an amount equivalent to what is given to the governor’s fund. Gitesh Desai, president of SEVA International, requested to include his organisation as one of the beneficiaries along with the mayor and the governor’s relief funds. The SEVA International had rescued 687 people from the catastrophic flooding brought by Harvey.

Jagdip Ahluwalia of the Indo-American Chamber of Commerce said it would help businesses re-establish. India House, a nonprofit organisation, pledged to raise USD 50,000 for each fund. IACF president-elect Mahesh Wadhwa pledged USD 100,000, with USD 25,000 coming from current president Vanitha Pothuri. Arun Verma of Sri Sita Ram Foundation also pledged USD 10,000.

Qatar’s ambassdor to the US, Meshal bin Hamad Al Thani, said the Persian Gulf nation was donating USD 30 million to help people in Texas recover from Harvey. The United Arab Emirates, pledged USD 10 million to help with local and state recovery efforts. The donations from Qatar and UAE were announced as the leader of Kuwait, which has been mediating the Qatar crisis, was in Washington discussing the dispute with President Donald Trump and other American officials.

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UN chief asks nations to commit to Paris deal amid rising deaths due to floods

UN Secretary General Antonio Guterres Related News

Citing the “dramatic floods” in India and Nepal, UN chief has urged nations to commit to the historic Paris deal to address the threats posed by climate change as natural disasters become frequent and more devastating. Weeks of torrential monsoon rains and catastrophic flooding in India, Nepal and Bangladesh have devastated the lives of millions of children and families.

UNICEF estimates that almost 16 million children and their families are in urgent need of life-saving support. Since mid-August, there have been at least 1,288 reported deaths. “First of all, climate change today is undeniable. In the US, as in Portugal and other parts of the world, we are seeing heat waves, we are seeing dramatic floods – Sierra Leone, India, Nepal – we always had floods in the past but now natural disasters are becoming more frequent, more intense and with more devastating consequences,” Guterres said.

He said as deserts are progressing, glaciers diminishing and sea levels starting to rise, it is clearly a threat to humanity. “To fight it we have today an important instrument – the Paris Agreement. We need to make sure that all countries commit themselves to that [accord],” he said. Without naming the US, which has decided to pull out of the climate accord, Guterres said wherever countries are not able to commit to the climate deal at the government level, societies, the business communities and cities should lead the process.

The Paris climate deal aims to prevent the Earth from heating up by 2 degrees Celsius since the start of the industrial age. The US is the second largest emitter of greenhouse gases after China. “…In this way, we can be able to meet the Paris Agreement, but with an increased ambition because Paris is not enough to be able to contain global warming at the level that is acceptable,” he added.

With the world facing the challenges of terrorism, extremism and the refugee crisis, Guterres said the UN must be an instrument for a surge in diplomacy for peace. He said nations must forget their and come together to put an end to these tragic series of crises, violence and conflicts. “Because these conflicts are also becoming more and more interlinked and more linked to global terrorism. So we need to fight terrorists where they are, but we need to address the root causes of terrorism,” he said.

Guterres asserted that there is need for nations to come together to solve conflicts and at the same time build cohesive societies where “people can feel they belong, where they don’t feel discriminated [against] and respect human rights, to make sure that terrorist organisations have more and more difficulties recruiting people”. “So we need – in sustainable development, in human rights and in a peace and security approach – to combine all the UN instruments in order to be able to defeat terrorism,” he added.

Earlier this week, Guterres had said that India, China and the US have experienced the most natural disasters since 1995 as he urged nations to get serious about keeping the ambition high on climate action.

“The United States, followed by China and India, have experienced the most disasters since 1995,” Guterres had said, adding that last year alone, 24.2 million people were displaced by sudden-onset disasters – three times as many as by conflict and violence. Guterres had said the UN stands ready to support relief efforts in any way possible. He added that the number of natural disasters has nearly quadrupled since 1970.

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Hurricane Harvey: Donald Trump signs aid and debt bill over GOP objections

Speaker of the House Paul Ryan (center) and Majority Leader Kevin McCarthy (right) in the House. (AP Photo/J. Scott Applewhite) Related News

Congress on Friday sent President Donald Trump a massive package of $15.3 billion in disaster aid linked to an increase in the nation’s borrowing authority that angered conservative Republicans who hissed and booed senior administration officials dispatched to Capitol Hill to defend it. Hours later, Trump signed the measure into law.

The House voted 316-90 for the measure that would refill depleted emergency accounts as Florida braces for the impact of Hurricane Irma and Texas picks up the pieces after the devastation of the Harvey storm. All 90 votes in opposition were cast by Republicans, many of whom seethed after Trump cut the disaster-and-debt deal with Democratic leaders with no offsetting budget cuts.

“You can’t just keep borrowing money. We’re going to be $22 trillion in debt,” said Rep Jeff Duncan, R-S.C. The aid measure is just the first installment in government spending that could rival or exceed the $110 billion federal response after Hurricane Katrina in 2005, though future aid packages may be more difficult to pass. The legislation also funds the government through December 8.

In a closed-door meeting before the vote, more than a dozen Republicans stood up and complained about Trump cutting a deal with Democratic leaders Chuck Schumer and Nancy Pelosi instead of GOP leaders trying to deliver on the president’s agenda. Budget chief Mick Mulvaney, a former tea party congressman from South Carolina who took a hard line against debt increases during his House tenure, and Treasury Secretary Steven Mnuchin faced a rough time in pleading for votes.

Mnuchin elicited hisses when he told the meeting of House Republicans ‘vote for the debt ceiling for me,’ said Rep. Mark Walker, R-N.C. Republicans were in disbelief after Mnuchin argued that the debt ceiling shouldn’t be a political issue in the future, said Rep. Mark Sanford, R-S.C. Rep. Ryan Costello, R-Pa., described a surreal scene with Mnuchin, a former Democratic donor, and Mulvaney, who almost certainly would have opposed the very measure he was sent to pitch, pressing Republicans to rally around the legislation.

“It’s kind of like `Where am I? What’s going on here?” Costello said. “If it wasn’t so serious it kind of would have been funny.” Mulvaney was booed when he stepped to the microphone, though lawmakers said it was good-natured. He defended the deal and Trump. “It was absolutely the right thing to do,” Mulvaney told reporters after the meeting. “The president is a results-driven person, and right now he wants to see results on Hurricane Harvey, Hurricane Irma and tax reform. He saw an opportunity to work with Democrats on this particular issue at this particular time.”

But Mulvaney further upset Republicans when he wouldn’t promise spending cuts as part of a future debt limit vote. Trump on Wednesday had cut a deal with Sen. Schumer and Rep. Pelosi to increase the debt limit for three months, rather than the long-term approach preferred by the GOP leaders that would have resolved the issue through next year’s midterms.

Conservatives disliked both options. Voting on the debt limit is politically toxic for Republicans, and the deal will make the GOP vote twice ahead of next year’s midterm elections. Fiscal conservatives have clamored for deep cuts in spending in exchange for any increase in the government’s borrowing authority. The storm relief measure had widespread support, but the linkage with the debt ceiling left many Republicans frustrated.

“Are we doing anything on fiscal sanity? No,” said tea party Rep. Dave Brat, R-Va. “And so Mick (Mulvaney) came over today, the Treasury secretary came over today, and we said, ‘Do you have a plan for fiscal sanity going forward?’ No. Crickets. So that’s the frustration.”

Democratic votes are invariably needed to increase the debt limit – and avert a potential market-quaking default on government obligations – and Schumer and Pelosi successfully pressed to waive the debt limit through December 8. Democrats are cautious about working with Trump, but hold out hope for legislation on the budget, health care, and shielding young immigrants brought to this country illegally from deportation.

Moderate GOP Rep. Peter King, R-N.Y., said he’s been encouraging Trump to find ways to work with the Democrats. King attended a Thursday meeting in the White House with lawmakers when the president asked him “how did I feel the bipartisan deal was going. Did I think it was good?” I said, “‘Absolutely, we need more of it.’ I said, ‘You and Chuck. The two of you in the room. We can make some good deals.‘”

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