Investing.com — The recent wave of devastating wildfires in Los Angeles County, California, could be the costliest wildfire event in California history, Goldman Sachs analysts said, likely factoring into upcoming U.S. economic data.
Comparing wildfires to other disasters, such as hurricanes and earthquakes, the investment bank sees a decline of about 0.2 percentage points in GDP growth in the first quarter, excluding any offsetting measures from rebuilding efforts, GS said.
In the labor market, GS expects a roughly 15,000 to 25,000 decline in nonfarm payroll growth in January due to the wildfires, in part because only about 0.5% of California's population was currently under evacuation. The investment bank does not expect a rise in unemployment claims due to this event, and initial claims data scheduled for release this week are likely to remain low.
GS analysts said they did not expect insurance costs to have a “significant impact on inflation,” seeing little impact on prices outside California, given that homeowners insurance makes up a negligible portion of the PCE price index.
Los Angeles County has been hit by a series of devastating wildfires over the past week, with initial damage estimates estimated at $30 billion. This number could make the wildfires the costliest in US history.
Authorities were seen rushing to extinguish the fires before dangerously high winds began this week, which are expected to worsen the fires.
