Goldman Sachs Warns Wildfires Could Deter U.S. Economic Growth
Goldman Sachs analysts are predicting that the devastating wildfires that have ravaged Los Angeles County, California, could be the most costly in Californian history and could even factor into upcoming U.S. economic data.
According to Goldman Sachs, the wildfires could subtract a roughly 0.2 percentage point from first-quarter gross domestic product (GDP) growth, unless offset by measures taken to rebuild damaged areas.
The bank is also forecasting that the labor market could be negatively impacted by the fires, predicting a reduction in nonfarm payrolls growth in January of 15,000 to 25,000, primarily due to evacuations and temporary job losses. However, Goldman Sachs expects jobless claims to remain low due to the relatively small population of Californians under evacuation order (approximately 0.5%).
Additionally, Goldman Sachs is predicting that insurance costs related to the wildfires are unlikely to significantly impact inflation, citing the minor portion of insurance premiums in the overall personal consumption expenditures price index.
Initial estimates suggest the damages from the LA County wildfires have already reached approximately $30 billion, potentially making it the most costly wildfire event in U.S. history.
Emergency services are racing against time to contain the fires before hazardous wind conditions become worse this week.
