How Will Irene Affect the Economy and President's Campaign?

A Fox News article this morning posed an interesting dilemma: Hurricane Irene throwing the president a curveball in economic efforts:

President Obama's been blaming "bad luck" lately for the state of the economy. Then along comes Hurricane Irene. 

The storm that already has lashed the Bahamas was making its way toward the North Carolina coast Friday. Thousands of people were under evacuation orders as governors all along the East Coast declared a state of emergency. 

The potential effect from natural disasters like this is a mixed bag. They can cause billions in property damage, sap up government resources, trigger a rise in gas prices and cut down on productivity in the near-term. Irene's bill may be inflated by its presumed landfall along the East Coast, where property values are high. 

At the same time, the effects of hurricanes tend to be localized and not big enough to choke the national economy. Any drop-off from the immediate damage can also be offset later by the burst of spending on construction and relief efforts. Plus Irene has been downgraded to a Category 2 and is tracking a bit east of New York City -- a good sign.

But studies show, according to this article, it may not be all that bad for team Obama.

One Labor Department study found that in the aftermath of Katrina, New Orleans recorded nearly $3 billion in lost wages in the 10 months following the storm -- though Katrina was unique in that the associated flooding caused far more damage than the storm. 

A Congressional Research Service report from 2005 that examined the economic impact of that and other storms noted that the assumption is hurricanes have a "limited and temporary" effect on growth.

Heaven knows the U.S. economy needs all the help it can get.