Hurricanes Harvey and Irma will have a slight negative impact on U.S. GDP in the short term, but rebuilding in the storm damaged areas should end up helping economic growth, according to Treasury Secretary Steven Mnuchin.
Mnuchin, speaking at the Delivering Alpha conference presented by CNBC and Institutional Investor, also said the federal government will provide whatever aid is required. Congress last week approved a $15.3 billion package for victims of Hurricane Harvey, and more aid is expected.
"I would say there clearly is going to be an impact on GDP in the short run. We will make it up in the long run," said Mnuchin. "As we rebuild, that will help GDP. So, I think it's too early to tell what the exact estimates will be, but I think it won't have a bad impact on the economy."
Goldman Sachs economists estimated that Hurricane Harvey alone could slice 1 percent off of GDP in the third quarter. Moody's Analytics shaved a half percent off of its third-quarter GDP forecast and estimates the two storms could have caused between $150 billion and $200 billion in property damage.
The hurricane aid package was tied to a congressional vote on the debt ceiling after President Donald Trump made a deal with Democrats to raise the nation's borrowing limit for three additional months.
"The president wanted to be very clear. We needed to make sure we got the money to the states so they could protect citizens and property, which was the most important issue, and we accomplished that," Mnuchin said. "The first payment is a down payment. We'll see what we need to spend more. But the president will make sure that whatever the federal government needs to contribute to this, we will do so."
