The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
The region's other disaster
With most of the attention directed at the Gulf oil spill, the Tennessee floods have perhaps been little-noticed outside the Volunteer State. But the events of May 1–2 were significant to say the least. In terms of comparison, the U.S. Geological Survey wrote that the flows on major Tennessee rivers
" '[W]ere much greater than anticipated based on previous experience and exceeded those observed in both the 1975 and 1927 floods,' according to Rodney Knight, surface-water specialist with the USGS Tennessee Water Science Center."
The Atlanta area experienced a similar flooding event in September 2009. A big difference was that the flood in Georgia did not hit the city's major business districts. Stretches of I-20, the major east-west highway, were submerged for a day or so, but most damage to the infrastructure was temporary. Flooding to the west of the city was devastating, and many homes and businesses were destroyed. Some roads were washed out, but repairs were quickly made, and for the most part the Atlanta region recovered quickly.
Nashville's experience was different. In addition to destroying homes and businesses, the floods hit the city's central business district, and highways were shut down for several days. The rail line between Nashville and Memphis was also damaged, but freight has been rerouted. So we do not expect that the floods in Tennessee, like those in Atlanta last year, will have a significant national economic impact.
State and local government response has been positively recognized by national agency officials such as Homeland Security Secretary Janet Napolitano, who visited Nashville on Saturday, May 8, and expressed how impressed she was by the way the state and local governments are handling the disaster. During a visit on Monday, May 10, U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan said that the federal government is standing behind local leadership's actions toward recovery.
The Tennesseean wrote last Sunday about the flood. Its report noted that government and aid agencies said they don't know how many damaged homes and businesses have flood insurance, but it is clear that many do not. "That could lead to more foreclosures in a housing market already struggling," according to David Penn, an economist with Middle Tennessee State University.
Along those lines, HUD's Donovan announced a 90-day moratorium on foreclosures by Federal Housing Administration lenders, allowing some temporary relief from past-due mortgages of flood victims. HUD will partner with housing agencies in Nashville and surrounding counties. Funds including $29 million in community development block grants will be redirected to flood recovery efforts, and FHA loans will be available to help citizens rebuild.
The Tennesseean report also quoted Matt Murray, an economist at the University of Tennessee in Knoxville, who said tourism dollars lost to the city will never be recovered, although he didn't think the flooding would do long-term damage to the industry.
The Atlanta Fed's Nashville Branch sits on higher ground and was far enough away from the Cumberland River that it did not sustain damage. In addition to reporting on Tennessee's recovery from the flood, the branch is playing a key role in meeting the region's cash delivery needs and disposing of currency contaminated by flood water from submerged ATMs and several bank vaults. The city will rebound, but it will take time to fully estimate the economic damage caused by the May flood.
Loss of property has been devastating to say the least, but loss of life has been worse. Ten people lost their lives in the Atlanta floods; the toll in Tennessee is nearly three times as great.
By Michael Chriszt, assistant vice president in the Atlanta Fed's research department, Lee Jones, regional executive at the Atlanta Fed's Nashville Branch, and Amy Pitts, REIN executive at the Nashville Branch
- Banks and banking
- Beige Book
- Business Cycles
- Commodity Prices
- Consumer Savings
- Data Releases
- Disaster recovery
- Economic conditions
- Economic Growth and Development
- Economic Indicators
- Fiscal Policy
- Gulf Coast
- Health Care
- Holiday Sales
- Labor Markets
- Local Economic Analysis and Research Network LEARN
- Monetary Policy
- Natural Disasters
- New Orleans
- Oil Spill
- Real Estate
- Sales Tax