Home Commentary and Analysis The Significance of Harvey to the US Economy and Manufacturing
The Significance of Harvey to the US Economy and Manufacturing

The Significance of Harvey to the US Economy and Manufacturing

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By William Tucker
Contributor, In Homeland Security

Hurricane Harvey did what all major storms do. It destroyed infrastructure, displaced or killed people, overwhelmed governments, and caused economic disruption well beyond the storm’s point of impact. For the people living in the storm’s path, the suffering will continue well beyond the time when the floodwaters recede.

Harvey Expected to Be the Most Expensive Natural Disaster in US History; What Will Happen Next?

Americans should be proud that so many of us have stepped up to offer all manner of assistance – everything from search and rescue to shelter to donations of food, clothing and money. When it comes to charity, Americans are a very generous people. With Harvey predicted to become the most expensive natural disaster in history, those donations are certainly needed.

As we continue to see the devastation, there is profound concern over what happens next. It might seem that we are thinking too far ahead while there is so much important work to be done to help those in immediate need. But Houston and the entire Gulf Coast are so vital to the economic well-being of the United States that rebuilding must be a top priority at the soonest practical moment.

Several years ago, I wrote about the importance of the Gulf Coast. While the bulk of that article covered New Orleans and the Mississippi River, it did not cover the importance of another major economic hub, Houston.

Houston’s Rebuilding and Regrowth Is Vital to US Economy

Houston was known primarily as an oil town for the better part of the 20th century. But the city has diversified economically in the past few decades. That doesn’t mean energy has diminished in importance; rather, the city has grown to include other industries such as chemicals, shipping and healthcare.

The area struck by Harvey accounts for nearly half of all Texas residents. That fact speaks volumes about the people and industry in Houston.

Houston is the fourth most populous city in the U.S. and its greater metro area also ranks fourth largest in the country. Texas is the U.S. leader in chemical production, with much of that production centered in the Houston metro area. The city has the second largest port in the U.S., behind New Orleans.

All told, Houston accounts for roughly 2.5% of the U.S. Gross Domestic Product (GDP). But that percentage increases when secondary and tertiary economy activity is included.

The Southeast and Southwest regions account for nearly one-third of the U.S. GDP, with much of that activity in Texas, Georgia and Florida. Furthermore, Houston is home to the Texas Medical Center, the largest medical complex in the world.

The federal government also plays a large role in Texas. Several important federal facilities in the Houston area include NASA’s Mission Control Center and the Johnson Space Center, along with several military institutions.

Hurricane Harvey has disrupted all activity in the Houston area. Recovery is expected to begin promptly in most sectors. However, the Department of Homeland Security estimates that it will take a full two years before everything is fully functioning again.

Many Houstonians Will Be Forced to Live Elsewhere, Some Permanently

One aspect that hasn’t yet been calculated is the individual cost. Nearly 85% of affected residents of the area do not have flood insurance. Those residents are responsible for the cost of rebuilding their homes, although low-interest loans are usually made available in such disasters through the Federal Emergency Management Agency (FEMA).

Nevertheless, many Houstonians will be forced to live elsewhere for some time. In some cases, they will have to leave the area entirely and resettle in another location. In a cruel twist of fate, Houston played an outsized role in taking in and permanently resettling many people displaced by Hurricane Katrina 15 years ago.

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The Gulf Coast is far too vital to the U.S. economy to ignore and infrastructure improvements to better manage flooding must be part of the rebuilding efforts.

Since Houston was flooded during Tropical Storm Allison in 2001, water management improvements have not kept up with an ever-growing Houston area and the Gulf Coast. The lives of U.S. citizens and the national economy are just too important to ignore any longer.

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