Goldman Sachs estimates the impact of the wildfires in Los Angeles on the US GDP, pays By Investing.com
Investing.com– Goldman Sachs analysts said the recent spate of devastating wildfires in Los Angeles County, California could be the costliest wildfire in California history and will likely weigh on upcoming U.S. economic data.
The GS said that comparing the wildfires to other disasters, such as hurricanes and earthquakes, the investment bank sees a roughly 0.2 percentage point drag on gross domestic product growth in the first quarter, excluding any compensatory measures from reconstruction efforts.
On the labor market, GS expects about a 15,000 to 25,000 drag on nonfarm payrolls growth in January due to the wildfires, in part because only about 0.5% of California’s population was currently under evacuation. The investment bank does not expect a rise in jobless claims due to the event, and initial claims data coming in this week are likely to remain low.
GS analysts said they don’t expect insurance costs to “have a big impact on inflation,” as they saw little spillover to prices outside of California, given that home insurance makes up a negligible portion of the CPI.
LA County has been hit by a series of devastating wildfires over the past week, with initial damage estimates at around $30 billion. This figure could make wildfires the costliest in US history.
Authorities raced to contain the blaze before the onset of dangerously strong winds this week, which are expected to further exacerbate the blazes.
