Natural Disasters are not like Recessions

In natural disasters:

1. Net migration temporarily collapses.

2. Per capita income rises (due to the poorest people leaving).

3. Unemployment is elevated for under a year.

In recessions:

1. Net migration falls, though not necessarily into negative territory.

2. Per capita income falls.

3. Unemployment is persistently elevated for well over a year (see above).

Inspired by Scott Sumner.

Don’t Trust, but Verify, all Economic Forecasts

Credit

Sometimes, the most useful tool in economic forecasting is a brick to smash against heads. Natural disasters and their equivalents don’t cause recessions in modern economies (Haiti is not a modern economy). A few collapsed buildings have never ever caused a recession on their own, no matter how much their collapse is talked about on TV news.