How is State Personal Income affected by natural or man-made disasters?
Natural or man-made disasters have two types of major effects on state personal income: they destroy property, and they disrupt the flow of income in the economy: typically reducing it in the short term and boosting it later. BEA’s estimates reflect both types of effects. Disruptions to the flow of income are generally embedded in the data on which the estimates are based. The impact of the natural or man-made disaster on personal income growth cannot be separately distinguished, however, because the source data record actual activity and do not attempt to separately identify the effects of the disaster. Nonetheless, in the short run, compensation in many industries is likely to decline in areas directly affected by the disaster because of a decline in production, while in some industries involved in the cleanup and repair (construction and health care and social assistance) compensation may increase. Similarly, compensation could increase in areas that are the recipients of evacuees,
