The 2024 hurricane season is finally ending, thank goodness. Well, at least officially. Typically, U.S. residents recognize the window of potential peril operating between the beginning of August (with September being the historically worst month) through the end of November, when atmospheric anomalies tend to settle down. And while North Americans have dodged a bullet during certain past years (for instance, only two category 2 + occurrences in 2012), this year portends toward the gloomier end of the spectrum.
Hot on the heels of catastrophic flooding from Helene in the western third of North Carolina, Milton made landfall less than two weeks later, spawning tornadoes and causing widespread devastation and flooding of its own for the greater part of the Floridian Peninsula—this after a parade of smaller storms, Beryl, Debby and Francene—had buffeted the Atlantic Basin previously.
And, as naturally compassionate creatures, we sympathize first with the human toll dealt in the aftermath of such natural disasters (sadly, more than 300 deaths by the end of October). Heroic stories of search and rescue accounts and genuinely heartwarming narratives of neighborly outreach during the ongoing deluge have filled the pages of local journals for weeks afterward, indicating our better angels.
However, as estimators, we reflexively gravitate to the measure of devastation in terms of cost. And the cost of picking up the pieces left behind these torrential storms are no less than horrific. Early estimates project a possible $50 billion price tag, putting this year’s hurricane season’s cost among the worst—right up there with Andrew, Katrina and Sandy.
The excessive burden can be attributed to a number of factors in addition to the apparent intensity of the storms. Uninsured costs, demographic movements (many homeowners have come to reside in vulnerable areas) and supply-chain disruptions associated with the hurricanes will contribute greatly to a growing tally. This is not to mention the impact on the recent dockworkers healthy pay raise. But currently, elevated rates of inflation (with existing fuel prices as the main culprit) will undoubtedly have the most grossly negative impact on rebuilding. Given all the above, it seems a no-brainer that recent construction costs will certainly compound the problem.
In spite of questionable prognostications that construction costs have trended toward leveling off in the near term (with the exceptions of soft lumber, steel, and aluminum), the impact of prices on construction material, labor and equipment have dramatically outstripped the overall rates of inflation over the recent past, leading to adjustments on the high end.
Recent pricing for drywall and related materials: A prime example of this relates to gypsum products, which suffered a 38% increase over the past four years, with steel coil costs threatening to surpass even that outrageous leap. And while soft lumber is generally associated with wood framing, plywood, a vital component of rebuilding, is often used in commercial drywall assemblies for backing and structural properties.
Labor issues: While rising construction costs are traditionally reflected in terms of material expenses, alarming issues regarding labor increases have recently emerged as well. Skyrocketing retirement levels, combined with low levels of recruitment and competition with other industries (think, semiconductors), have given rise to an increase in wage levels (and attendant burden) heretofore unseen. Add this to the inevitable travel expenses (per diem) and the premium time for overtime that will be incurred with the mobilization of a work force to remote locations for rebuilding after the storms, we can see that labor cost increases could easily eclipse rising material costs over the duration of reconstruction.
Speaking of duration, it stands to reason that if prices continue to rise (and they always do) as the period of reconstruction extends, the overall cost of these most recent storms will continue to compound themselves as they incur.
And so, with all the above construction factors combined with emergency costs and extensive cleanup, it becomes clear that a catastrophic event such as the occurrence of this year’s hurricane season could make an economic impact for years to come.
