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Hurricane Harvey could cost $190 billion, be worst-ever U.S. natural disaster, says AccuWeather

Storm impact is likely to cause the Federal Reserve to postpone its next rate hike

AccuWeather upgraded its estimate of the likely cost of hurricane Harvey on Thursday, saying it now expects the damage caused by the storm to come to $190 billion, or a full 1% of U.S. GDP.

That’s up from the $160 billion figure the weather service estimated on Wednesday. The new tally would be more than the combined cost of Hurricanes Katrina and Sandy, said Dr Joel Myers, founder and chairman of AccuWeather.

The impact is likely to cause the Federal Reserve to postpone its next interest rate hike, he said.

“Business leaders and the Federal Reserve, major banks, insurance companies, etc. should begin to factor in the negative impact this catastrophe will have on business, corporate earnings and employment,” Myers said in a statement. “The disaster is just beginning in certain areas.”

AccuWeather is expecting areas of Houston, the fourth biggest city in the U.S., to be uninhabitable for weeks or even months, because of water damage, mold and dirty and disease-ridden water.

The storm has crippled the U.S. energy industry, shutting refineries, ports and pipelines. Harvey has hurt more than a dozen refineries, including the two biggest in the country, Saudi Arabian Oil Co.’s Motiva facility in Port Arthur and Exxon Mobil Corp.’s Baytown facility—which together account for more than 30% of U.S. refining capacity, The Wall Street Journal reported, citing data from IHS Markit.

Read: More refineries come off line in Harvey’s wake

See: Airline stocks fall as airports remain closed in Texas

Related: Houston-based Francesca’s leads selloff of retailers with heavy exposure to storm-ravaged Texas

Early Thursday, a chemicals plant owned by French company Arkema SA was rocked by explosions caused by unstable chemicals that heated up after a loss of power cut off refrigeration.

Footage shows aftermath of Houston chemical plant explosion (0:30) Aerial footage shows a Houston-area Arkema chemical plant after two explosions were reported early Thursday following widespread flooding in the region caused by Harvey. Photo: AP

Thousands of residents are now being housed in shelters and at least 29 people are reported to have died.

See: Here’s how many gallons of gasoline you can get from the oil in the Strategic Petroleum Reserve

Myers reiterated that the forecasting community did a good job of warning people ahead of the storm, but that public officials were slow to react or know what to do.

“This was unfortunate because when a natural disaster threatens, minutes and hours count and preparation and risk avoidance is imperative,” he said.

Don’t miss: This economist sees potential for 1 million jobs lost to Harvey

Also: Damage from Harvey may make it fourth-worst all time

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