Monday, May 9, 2011

Flooding and Unemployment

The current North American flooding, especially affecting the eastern U.S-Canada border area and the Mississippi River valley, is putting more than a few commercial streets underwater. As a result, thousands of people are unable to work, with work places closed and inaccessible — perhaps 50,000 in Mississippi alone. The concern for the broader economy is not so much the number of people unemployed because of the flooding, but how long they are kept out of work. If water levels are as forecast, most of the affected workers could return to work in one or two weeks. If the water levels are slightly higher than forecast, cleaning up and drying out could take much longer. There could also be problems if there are new storms before the Mississippi River recedes, or if levees in Louisiana and Mississippi that have never been tested with this kind of water fail to work as expected. In any of the more unfavorable scenarios, the floods would have a noticeable impact on national unemployment rates.