Washington Journal continues.
Well, now joining us from
Moody's Analytic headquarters
in Westchester, Pennsylvania,
is economist, Sohini Chowdhury.
We want to talk about some
of the economic impacts
of the natural disasters that
this country has experienced
in the past couple of months,
particularly the flooding
in the Mississippi River basin.
Sohini Chowdhury, how
large is the economy
of the Mississippi River basin?
How would you describe
that economic area?
So Mississippi is one
of the poorest states.
The Mississippi
per capita income
is the lowest in the country.
And its GDP, which is
around $90 billion,
is 0.7% of the national GDP.
But what about the
Mississippi River basin,
where it's been flooding?
Yeah, so the states
that have been affected
have been at the south
river basin, which
is south of Cairo, Illinois,
so there you have Tennessee.
Memphis is the only major
city to have been affected.
Most of the other areas
have been rural so far.
So down from Tennessee,
you have Missouri, and then
Mississippi, and
Louisiana, of course.
OK.
So if somebody-- for a
macro impact of the flooding
that occurred there recently,
how would you describe it?
So the industries that
have been-- the first thing
is that the numbers
are still trickling in,
because the
floodwaters haven't yet
receded completely, so
the damages are still
being computed.
But in terms of industries
that have been affected,
first would be croplands,
because most of the area
is rural, so croplands have
been severely impacted.
And then of course,
because you have the river,
the river is an important
form of transportation,
especially grains from
farms in the Midwest
to down at the Gulf port from
where they are exported out
of the US.
So traffic along the river,
barge traffic, shipping,
those industries
have been affected.
And then the
hospitality industry,
which are the casinos
along the river.
So this is where the
impacts are limited to.
Now have we seen an increase in
commodity prices such as corn,
et cetera, because of
this massive flooding?
Yes, there have
been supply effects,
supply shocks,
definitely, because crops
have been damaged in Arkansas.
For example, rice fields.
Then Tennessee also
has seen flooding.
Farms have been inundated
with floodwaters.
But the good thing
is that we believe
that these effects would be
temporary, just because most
of these farms are insured.
So although there would be
temporary shocks in the sense
that farmers would have to
replant all these crops,
so that would be some loss
in time and stuff like that,
but it won't be a long-term
effect strong enough
to push up commodity prices.
Sohini Chowdhury, what about
shipping on the Mississippi
and particularly when we get
down to the New Orleans port?
How has that been
affected economically
because of the flooding?
So that was a very big concern.
Barge traffic had been affected.
So around 600 barges move up
and down the Mississippi River
on a given day on average.
And more than half
of US grain exports
are moved from
the Midwest farms,
and then they are exported
into grain elevators.
And they go out into
Canada, Asia, and Europe.
For a day at least,
barge traffic
was limited, just because
of these very high currents.
And people they're also fearing
that the wakes generated
from the barges would
put additional pressure
on the levies.
But that limited interruption
did some damage to the economy.
But because it was just
a limited interruption,
it was fine.
But it had the potential
to do a lot of damage, just
the transportation
along the river.
Well, Sohini Chowdhury is
an economist with Moody's.
And she is joining us for
the next 20 minutes or so
to talk about the
economic impact of some
of the natural disasters
we've experienced.
202 is the area code.
624-1111 for Democrats, 1115
for Republicans, and 624-0760
for independents.
Now, if you have been in one of
these recent natural disasters,
we would like to get
your perspective as well.
We're talking about
the economic impact
of these natural disasters.
737-2579 is the number
for you to call.
Sohini Chowdhury, you've talked
about the temporary effect
of this natural disaster
in the Mississippi basin.
How temporary, and if you had
to put a price tag, a full price
tag, on how much this is
going to cost the US economy,
what would that be?
A price tag is difficult, but
so far, temporary estimates
suggest that the loss
to the entire region
would be something to
the tune of $6 billion.
But given the kind of
forecasting and estimates
that we do at Moody's, I
would say that the effects
would be temporary.
So the economies
along that area would
be back on normal track
in the next quarter or so,
the reason being that the
national economy is recovering.
So for example, the
casinos had closed.
They had been
closed for a month.
They started reopening during
the Memorial Day weekend.
So there is a significant
amount of tax revenue losses.
If these casinos, especially
the ones in the Tunica region,
they are closed, but given
like we had forecasted,
these would be
short-term effects.
The casinos have
started reopening.
And national income and
confidence is rising,
so people will once again start
flocking to these casinos.
And once the floodwaters
completely recede,
we believe that the economies
will be back on track
very quickly.
Sohini Chowdhury,
can you also comment
on the effect of a tornado
such as the one that
went through Joplin,
Missouri, recently?
The economic impact of that?
So there were tornadoes
in Joplin, Missouri,
and then Mississippi itself.
That entire region-- Alabama,
Mississippi, North Carolina--
they had all these
tornadoes during April.
So people have estimated that
losses from those tornadoes,
including insured and
uninsured, would be $10 billion.
But again, we believe
that, like the floods,
they would be temporary.
Couple of reasons--
one important reason
that we at Moody's believe
is that unlike earlier,
like maybe 20 years
back, people now
have a better system in place
to take care of these floods
and tornadoes.
So it's not like they are
happening for the first time.
That region is tornado prone.
So there definitely will
be short-term effects.
One positive upside might be an
increase in construction, which
would definitely be beneficial
to the national economy
as a whole, given that the
economy is still recovering.
Homes have been destroyed.
So an increase in
construction activity
would really help
and would actually
be an upside to the economy.
Let's take some calls.
Redding, Connecticut,
Jennifer, you are first up.
Please go ahead
with your comment.
My comment is yes, these are
quoted, "natural disasters,"
but how much of these natural,
quote unquote, "disasters"
are impacted by climate change?
I don't hear anybody
really speaking
to climate change
on a national level.
I don't hear CSPAN talking
about it, I don't think.
And I don't hear
the mainstream media
talking about climate change.
It's out there.
It's happening today.
It's been going on for years.
And we've got to take
care of some concerns
about climate change.
Newsweek has a very interesting
cover piece this week,
June 6 date, "Weather
Panic," it's the cover story.
This is the new normal, and
we're hopelessly unprepared.
Sohini Chowdhury, is this
something that you study?
So yeah, as an
economist, I probably
can't talk a lot about what the
causes are of these tornadoes,
but definitely, this particular
year, especially in April, we
have seen a record number of
tornadoes all over the country.
And today morning,
you had tornadoes
in Springfield, Massachusetts,
in western Massachusetts.
So definitely, this
particular year, there
is something going on.
Climate change is probably one
of the reasons, global warming,
but unfortunately,
I really can't
talk in details about why
the tornadoes are happening.
Sohini Chowdhury, let's go
back to how much cropland has
been lost during the flooding.
Yeah, so in Mississippi,
around $200 million
of loss of damage from
croplands has been estimated.
And that's an annual
loss at this point?
I mean, because it's
grown every year?
No, no, no, this is just
the loss from the flooding,
from the one month
of flooding so far.
Once the waters totally
recede, then the number
is going to increase.
And agriculture in Mississippi
is like a $2.2 billion
industry.
Earlier, agriculture was
an even more important part
of the economy
because of cotton.
That was the major cash
crop from the 1830s
to the Second World War.
But now the economy is
a lot more diversified.
Manufacturing is there,
but even in manufacturing,
most of the
manufacturing industries,
like food processing and stuff,
they depend upon agriculture.
So loss so far has been
$200 million in Arkansas.
It is to the tune
of $500 million.
Next call for our guest from
Moody's-- Columbus, Georgia,
Sue, independent line.
I was listening to
the global warming
question, the economical
effect of global warming.
How much does it cost
for our president
to fly from Washington
to circle over that area,
just to look and
see what's done?
What is the cost--
Do you know what, Sue, I don't
think that's a [INAUDIBLE]
our guest Sohini
Chowdhury can address.
Again, we're talking
about the economic impact
of the natural disasters that
the US has faced recently.
Atlanta, Thomas, you are
on the air, good morning.
Yes, I was calling about
the floods and everything.
Yes, sir.
We know that as
well as just like
in Japan that HAARP
and Digisonde are
involved with that.
And they're intentionally
flooding the Mississippi River
and caused all this
food to be ruined.
And they want to have a
deepwater port or NASA
highway all the way up there,
and they're intentionally
doing all this stuff.
And then Obama's going to come
down and look like a savior
after it's all over with,
and try and get reelected.
If you go to
wasobamaborninkenya.com,
you can see his real
birth certificate.
Sohini Chowdhury, we
have this tweet here,
"Toyota plant in Mississippi
got big tax breaks
and will not open."
Are you familiar
with this situation
and if whether or not this
is one that's related to
the flooding?
Could you repeat
that question, Peter?
Sorry, I missed you.
There's a Toyota
plant in Mississippi
that got big tax
breaks-- this is
the tweet that we got from a
viewer-- and will not open.
Are you familiar with
this Toyota plant
and whether or not it's
related to the flooding?
No, actually not.
I mean, yeah, the tornadoes
are related to the flooding.
I mean, that's true, because
it's this particular storm
system, which resulted
in the tornadoes
and resulted in rainfalls
and therefore the flooding.
So they are all interlinked.
But yes, regarding
the tornado plant,
I am not familiar with that.
Next call for Sohini
Chowdhury, an economist
with Moody's talking
about the economic impact
of natural disasters,
John, Fairfax, Virginia.
Hi, John.
Good morning, Peter,
and Mrs. Chowdhury,
and everybody listening.
You can't really
predict tornadoes,
but you can predict floods.
And thank god for the
spillways and floodplains.
My suggestion is that we need
to prepare for the future.
And part of that could
be in using floodplains
to dig out areas to flood and
use that dirt to create areas
to live on, so that there would
be only crop damage when they
open these up.
And this could be done anywhere
there is potential flooding--
create a reservoir to take
the flooding when it occurs
and then pump the water
from there to people
that need it elsewhere.
Sohini Chowdhury.
Yeah, Peter, I just got a
few words about the spillways
and cropland, so
if you could just
summarize his question for me.
You know what, it was
pretty complicated.
And it was pretty long.
I'm not sure that I could do
it justice, so I apologize.
Are you having trouble
with your audio?
I can hear you fine.
It's just that some
of the callers--
Some of the callers
go in an out.
Yeah, yeah.
OK.
All right, well for
the last 20 minutes,
our guest has been
Sohini Chowdhury.
She is an economist with Moody's
in Westchester, Pennsylvania.
And we've been talking
about the economic impact
of natural disasters.
One of the things that that last
viewer did talk about, Sohini,
was that you can't
predict tornadoes.
Right.
And what has been the
cost to the insurance
industry of all of this?
The cost has been pretty
high, pretty significant.
After Katrina, for example,
the insurance industry
went bankrupt, totally bankrupt.
So that is definitely a big
concern for the industry.
I can't put a number to
that, but it is definitely
a very, very significant amount.
We appreciate your being
on the Washington Journal
this morning.
