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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Economic News Bleak for Country’s Mid-Section

The impact of flooding on the region’s economy

Against the backdrop of higher inflation, mounting deficits and a moribund real estate market, the economic news out of the mid-section of the United States is, shall we say, under water.

Costs to deal with the economic impact of the flooding are currently estimated at $4 billion, according to FEMA.  However, FEMA is quick to point out that it is too early for them to predict an exact number.  The numbers that they can quote with accuracy are staggering:

·         The Mississippi River flow at Memphis, Tennessee is currently 15 million gallons per second.

·         The water level at Memphis is 37.8 feet above flood stage and just 1.5 inches below the record high.  That 1.5 inch margin is expected to be exceeded in the next 24 hours, and the Army Corps of Engineers expects a level of 57 to 64 feet above flood stage sometime between May 19 and May 21.

·         In Arkansas, which produces 50% of the country’s rice, more than 1 million acres of farm land are flooded and fully 10% of that will not be planted this year.

A perfect storm of sorts consisting of high snowfalls in the mid-section of the country and record-setting rainfall impacting the Ohio River Valley in late April have fed tributaries of the Ohio and Mississippi Rivers for the past few weeks.  All this water is now heading down-river towards Louisiana, the next battleground in the struggle to save cities and towns at the expense of rural areas and farm land.

The economic news for the businesses of the region is not good.  Shipping lanes are closed for the foreseeable future impeding the movement of raw materials into factories and finished goods out to market. Jobs will no doubt be lost in the manufacturing sector.  Eleven Southern refineries are in the path of the advancing floodwaters and worries about these facilities sent oil prices back up in active trading Monday and Tuesday of this week.  Casinos, so vital to the state revenues along the Mississippi, will idle 13,000 workers if (or when) they shut down due to flooding.

In Louisiana, preparations are being made to release river water north of Baton Rouge into the Morganza Spillway.  This will divert millions of gallons of water into an area that has a few cities in its path.  The economic news for this region is not positive.  Further upriver, the Army Corps blew up a levee in southern Missouri to relieve pressure on the levees in Cairo, Illinois which has virtually eliminated the growing season for farmers in that region. 

Residents in this part of the country have never seen the rivers this high, but they have heard stories about the record floods of 1927 and 1937.  Many are predicting that this year’s floods will beat the previous flood levels given the water flows still filling tributaries upstream.  In fact, Vicksburg, Mississippi is already at 4 feet above previous records. 

Record floods usually come with record price tags.  Unlike the tornadoes which ripped through the Deep South just last week, the total damages from floods are not as easily calculable because the event lasts for weeks.  It seems that the economic news for this region just keeps getting worse.