Goldman Sachs Predicts $30 Billion Cost of LA Wildfires, Impacting U.S. Economy

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Goldman Sachs (NYSE:GS) analysts have stated that the recent wildfires in Los Angeles County, California, could become the most expensive wildfire event in the state's history, and are expected to influence upcoming U.S. economic data.

The investment bank compared these wildfires to other disasters like hurricanes and earthquakes, predicting a 0.2 percentage point impact on first-quarter GDP growth, not accounting for any recovery-driven factors such as rebuilding efforts.

In terms of the labor market, Goldman Sachs estimates the wildfires will reduce nonfarm payrolls growth by 15,000 to 25,000 jobs in January, partly due to the fact that only about 0.5% of California’s population is currently under evacuation. The bank does not expect a rise in jobless claims from the event, and anticipates that the initial claims data to be released this week will remain low.

The analysts also believe that insurance costs from the wildfires will have little effect on inflation, as homeowners' insurance represents a minor portion of the personal consumption expenditures price index.

The wildfires have caused significant damage, with initial estimates placing the cost at around $30 billion, potentially making this the most costly wildfire in U.S. history. Authorities are racing to control the fires ahead of high winds expected to worsen the situation this week.

 

 

 

 

 

 

 

 

Paraphrasing text from "Investing.com" all rights reserved by the original author.