JPMorgan Chase Institute
Weathering the Storm
The Financial Impacts of Hurricanes Harvey and Irma on One Million Households
The year 2017 was marked as the most expensive year for disasters in the US, with total damage exceeding $300 billion (NOAA, 2017). Disasters have been growing in both incidence and the losses they inflict. These losses include direct costs such as injury, loss of life, and damage to property; as well as indirect costs such as business interruption, lost wages, displaced residents, and lower tourism.
How do disasters affect households financially? The JPMorgan Chase Institute draws transaction-level data from over one million checking account holders to provide a first-ever daily look at the impacts of Hurricanes Harvey and Irma on financial outcomes. We find that checking account inflows temporarily dropped by over 20 percent, or roughly $400, in the week of landfall for both Harvey and Irma and recovered quickly in Houston, but not so in Miami. Checking account outflows dropped by more than 30 percent, or roughly $500, in the week of landfall and barely recovered 12 weeks after. The changes in spending resulted in welfare losses for some families. Among all spending categories, healthcare dropped the most. Because outflows dropped to a greater extent and for a longer period of time than inflows, families’ checking account balances remained steady or grew in the short run. But these healthier balances may mask incidents of deferred medical and debt payments, as well as anticipated costs to repair homes and replace property. In this sense, in the face of a hurricane, families appeared financially resilient, but may not have been economically resilient.
Our analysis uncovers five key findings:
Total inflows were more than 20 percent, or roughly $400, lower than baseline in the week of landfall. Inflows recovered quickly in Houston, but not so in Miami.
In aggregate, total outflows dropped by more than 65 percent around the day of landfall and by more than 30 percent, or roughly $500, in the week of landfall.
Debt payments dropped by more than 15 percent in the week when the hurricanes hit and cumulatively remained lower than baseline 12 weeks after Hurricane Harvey and 10 weeks after Hurricane Irma.
Cumulative impact of hurricanes on checking account outflows
(percent deviation from baseline)
Checking account balances were 10 percent, or roughly $670, higher than baseline 12 weeks after Hurricane Harvey and remained steady 10 weeks after Hurricane Irma.
These findings underscore that disasters such as hurricanes disrupt the flow of money and people’s financial routines. The spending category that dropped the most was healthcare spending, leaving open key questions as to whether the slowdown in healthcare spending was caused by a drop in demand or disruptions in healthcare supply. While checking account balances remained stable or grew in the short run, these healthier balances may mask welfare losses, such as incidents of deferred medical care and debt payments, as well as anticipated costs to repair homes and replace property. In this sense, in the face of a hurricane families appeared financially resilient but may not have been economically resilient. Local officials may want to consider strengthening efforts to improve the resiliency of healthcare providers in flood-prone areas. In addition, families living in flood-prone areas could take significant actions to make themselves more economically resilient in the face of a hurricane—notably, building a liquid cash buffer to weather financial volatility and purchasing flood insurance. This report marks a critical step forward in understanding the impacts of hurricanes on people’s financial lives and informing efforts to improve disaster preparedness and response.
This material is a product of JPMorgan Chase Institute (“JPMCI”) and is provided to you solely for general information purposes. Unless otherwise specifically stated, any views or opinions expressed herein are solely those of the authors listed, and may differ from the views and opinions expressed by JPMS’s Research Department or other departments or divisions of JPMorgan Chase & Co. or its affiliates. This material is not a product of the Research Department of J.P. Morgan Securities LLC (“JPMS”). Information has been obtained from sources believed to be reliable but JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) do not warrant its completeness or accuracy. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. The data relied on for this report are based on past transactions and may not be indicative of future results. The opinion herein should not be construed as an individual recommendation for any particular client and are not intended as recommendations of particular securities, financial instruments or strategies for a particular client. This material does not constitute a solicitation or offer in any jurisdiction where such a solicitation is unlawful.
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