California wildfires to have ‘modest drag’ on jobs growth
California wildfires to have ‘modest drag’ on jobs growth

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Deadly wildfires in Los Angeles County will likely result in only a “modest drag” on US jobs growth, even as the blazes shape up as one of the costliest natural disasters in US history, according to Goldman Sachs Group Inc.
Goldman economists led by Jan Hatzius expect a roughly 15,000-25,000 hit on non-farm payroll growth in the January employment report, in part because only about 0.5% of California’s population is currently under evacuation order or warning, according to a research note.
On unemployment insurance claims, timely alternative data haven’t shown a noticeable pickup in online searches for unemployment benefits since the start of the fires, the economists said. “As a result, we expect another low initial claims reading on Thursday.”
Goldman reckons the fires will lead to a drag of roughly 0.2 percentage points from first-quarter gross domestic product growth, excluding any potential offsetting effects from a rapid rebuild that has typically followed past wildfires.
The economists don’t expect insurance costs to have “much of an impact” on inflation.
Over 29,000 acres (11,736 hectares) have been charred by the blaze, which has killed at least five people. Nearly 180,000 people have been forced to flee their homes, and at least 10,000 structures have been destroyed or damaged. The fires are projected to cause $20 billion in insured losses, according to JPMorgan Chase & Co analysts.