Investing.com– Goldman Sachs analysts said the recent spate of devastating wildfires in Los Angeles County, California, could be the most costly wildfire event in Californian history, and were likely to factor into upcoming U.S. economic data.
GS said that comparing the wildfires to other disasters, such as hurricanes and earthquakes, the investment bank sees a roughly 0.2 percentage point drag on first-quarter gross domestic product growth, excluding any offsetting measures from rebuilding efforts.
In the labor market, GS expects a drag of about 15,000 to 25,000 on nonfarm payrolls growth in January from the wildfires, in part because only about 0.5% of California’s population was currently under evacuation. The investment bank does not expect a pick-up in jobless claims due to the event, with initial claims data due this week likely to remain low.
GS analysts said they did not expect insurance costs to “have much of an impact on inflation,” seeing little spillover to prices outside California, given that homeowners’ insurance makes up a negligible part of the personal consumption expenditures price index.
The LA County was battered by a swathe of devastating wildfires over the past week, with initial estimates of the damage pegged at about $30 billion. This figure could make the wildfires the most costly in U.S. history.
Authorities were seen racing to subdue the blazes before the onset of dangerously high winds this week, which are expected to further exacerbate the fires.
