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California Wildfires 2017 and the Economy

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Here's where I will discuss my thoughts about the 2017 California Wildfires striking Northern California as well as the Orange County area. These fires will have a giant impact not only on the state economy, but also the national economy.

ECONOMIC IMPACT OF THE 2017 CALIFORNIA WILDFIRES

Update October 12, 2017  These 2017 wildfires in the wine country of Northern California and in Orange County here in Southern California are a true disaster for our state. From CNN: "...the blazes that have killed 23 people. At least 285 people remain missing as the wildfires wiped out communities and scorched 170,000 acres. About 3,500 structures have been destroyed." There are estimates that as many as 172-thousand homes face some sort of fire risk now.

You know that I am a trained economist so allow me to just look at the economic impact of this and excuse me for not talking about the human impact.

The latest estimate is that the damage will total $65-billion. Nearly all of that will be co...vered by insurance, but the impact on the insurance companies will be spread around all policy holders in the state.

The state is going to lose a lot of tax revenue from this. A lot. And not just property taxes but also income tax revenue, sales tax revenue, excise tax revenue. The "multiplier effect" which we economists love to examine will be huge and will send ripples nationwide. California companies won't be ordering merchandise or shipping to other companies nationwide and even worldwide.

Banks will be hard hit as families don't pay mortgages or car loans and that will pressure banks to raise rates and fees.

Do you see where this is going?

Unfortunately there is no fix for this. Even huge money from the federal government is not going to replace what is lost. At best federal money will reimburse local governments for their expenditures to help displaced residents and to repair infrastructure as well as replace lost fire-fighting assets.

Tax breaks from the federal government will have no real impact for a year. Meanwhile unemployment will spike, retail sales will drop.

These fires will derail all of the grandiose plans that were in the works for our state. Any expenditures for the future will be canceled and will have to be used for immediate relief.

If you wanted something to kill that bullet train, this is it.

If you wanted something to force a rollback of the 16-cents a gallon gas tax hike, this is it.

I only hope our Governor sees the reality of the situation and pushes through these repeals immediately. We can't afford to spend money on a bullet train and we can't drain families with gas tax money when so many people have been hurt.

Now, looking at the long term which is three years out: Northern California will experience an economic boom once these communities are rebuilt. They will be rebuilt. That will generate huge spending for construction and a huge hiring binge for construction workers. Make no mistake about it: every disaster such as this is followed with an explosive economic recovery.

If 35-hundred houses are rebuilt that means consumers will purchase 3,500 new kitchens, and 7,000 new bathrooms, and 7,000 new TVs, and 3,500 new air conditioning and heating systems, and carpet and tile and thousands of beds and bedroom sets and living room and dining room furniture. There are likely to be hundreds or even thousands of new cars that will be purchased. Then businesses will have to be rebuilt, and inventories replaced.

It's just a shame that the price of the economic boom is the devastation, heartbreak, injuries and loss of life.

 

Here on our new media website "Moneyman" Alan Mendelson who is the original Best Deals TV Show reporter on KCAL9 and consumer advocate, shows you the best deals on TV, and the best buys, bargains and where savvy shoppers go to save, and how to get the most for "your money" with the best of Los Angeles, Orange County, Ventura County, Riverside County and San Bernardino County.  Our Best Buys TV Show has the best TV deals and is the only regularly scheduled weekly best deals TV show in Southern California.  We show you the best buys and best deals on TV and more deals and bargains on www.alanbestbuys.com and www.bestbuystvshow.com and watch for our Las Vegas TV show Vegas Best Buys.  Some of the content can come from paid advertising and from our advertiser paid TV infomercial programs.  The Best Buys TV Show is a paid infomercial program which may also include news and information which is not sponsored or paid for by advertisers.  AlanBestBuys.com has the highest ranking among competitive sites in Southern California according to the independent website ranking companies Alexa.com and Quantcast.com and our Best Buys TV Show is the most watched shopping and consumer information show in Southern California.

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