Blog - NorthStar Capital Advisors

Markets at All-Time Highs: What Should You Do Now?

The S&P 500 just closed at another all-time high.

Cue the headlines. Cue the opinions.

And for many investors? Cue the hesitation.

When markets are setting records, it can feel like the worst possible time to put new money to work.

After all, nobody wants to buy at the top.

But here’s the thing: All-time highs are not rare.

In fact, they’re more like mile markers on a long journey.

Between 1950 and 2024, the S&P 500 has hit more than 1,250 of them. That’s over 16 new highs per year, on average.¹

So if you’re thinking, “Maybe I’ll wait for a better entry point,” you’re definitely not alone.

But let’s break it down…

Investing at all-time highs has actually produced solid results, often not far off from investing at any random time.

Here’s how those returns compare:

1-year holding period: 11.2% after all-time highs vs. 12.6% for all periods
3-year holding period: 10.9% vs. 11.5%
5-year holding period: 10.3% vs. 11.3%²

In other words, investing at a market high has been just slightly below average… still solid, and far from concerning.

There’s more.

Since 1950, the market has dropped more than 10% in the year following an all-time high only 9% of the time.³

Look out 10 years, and the S&P 500 has never ended that period more than 10% down after any of its record highs.

That’s a powerful reminder for long-term investors.

Waiting to invest because prices are high is like waiting to fill your gas tank until prices drop.

You might save a little.

Or you might make the road trip take longer than planned.

Yes, the market could pull back. But it might not. And sitting on the sidelines while prices climb can be more costly than it seems.

So, what could you do?

We’re not saying to chase the highs.

We’re not saying you should try to time the market.

And we’re definitely not saying these historical returns will play out the same way in the future.

But we are saying this:

History shows that investing at all-time highs has not been as risky as many investors assume. It’s been, at least historically, a reasonable time to invest. And for long-term investors, it has often worked out just fine.

If you’re not sure what to do next, let’s talk about your options.

You don’t have to guess.

You don’t have to go it alone.

And you definitely don’t have to let fear steer your financial plan.

Thoughts on the shifting housing market

After years of runaway growth, the housing market is cooling…like a pot taken off the flame.

Still warm. Still active. But no longer boiling over. And the numbers back it up.

Across the U.S., 117,000 new single-family homes are sitting on the market. That’s the highest level since July 2009 and a 31% jump from last year.¹

Regionally, some places are feeling it more than others:

Texas: Active listings are 53% above normal²
Florida: Tampa and Jacksonville lead the country in price cuts³
California: Bay Area pending sales just saw their weakest March since 2012⁴

Even luxury buyers are slowing down.

In April, sales of high-end homes dropped 10% year-over-year.⁵

That’s not about mortgage rates…many of these buyers pay cash.

It’s about confidence.

That said, prices haven’t plunged.

Home values in the 20 largest metro areas dipped just 0.12% in March.

That’s the first monthly decline after 15 straight gains.⁶

It’s a small move, but a clear signal that the heat is coming down.

So why does this matter?

Real estate isn’t just a reflection of the economy.

It’s often a preview.

Housing tends to be one of the earliest sectors to respond when things start to shift. That’s why many economists watch it closely. It affects jobs, consumer spending, and local tax revenues.

When people get cautious about housing, that caution can spread. We’re not sounding alarms, but we are paying attention.

So where do we go from here?

It’s tough to say.

There are many variables still in play. Interest rates. Inflation. Employment trends.

That’s why this is a good moment to pause, reassess, and make sure your financial strategy still fits the environment.

Thinking about buying or selling? Considering real estate as part of your portfolio? Just wondering how this fits into your bigger picture?

Let’s talk it through. Markets evolve. Plans adapt.

If you’re curious how the current changes in real estate could affect your future plans or investment strategy, we’re here to help you think it through.

Sources:

Fast Company, 2025 [URL: https://www.fastcompany.com/91341501/housing-market-homebuilder-unsold-inventory-swells-to-2009-levels]
Newsweek, 2025 [URL: https://www.newsweek.com/texas-faces-major-housing-market-correction-prices-drop-across-state-2070190]
Realtor.com, 2025 [URL: https://www.realtor.com/research/april-2025-data/]
San Francisco Chronicle, 2025 [URL: https://web.archive.org/web/20250602214059/https://www.sfchronicle.com/realestate/article/home-sale-price-bay-area-20296381.php]
Redfin, 2025 [URL: https://www.redfin.com/news/luxury-homes-market-april-2025/]
Marketwatch, 2025 [URL: https://www.marketwatch.com/story/home-prices-in-the-biggest-20-markets-decline-for-the-first-time-in-over-two-years-heres-where-theyre-expected-to-fall-the-most-14cebe4f]

The patience premium: What market history teaches us

“How long will this last?”

“Will markets bounce back?”

“Should I make a change now?”

These are some of the most common and understandable questions investors are asking right now. When the market takes a sharp turn, it’s only natural to wonder what comes next and how long it might take to feel confident in the markets and economy again.

Let’s start with where we are today.

Over the past two months, markets have fallen sharply. The S&P 500 is down more than 17% from its February highs, while the Dow has dropped over 7,000 points.

What’s driving the decline? It’s not one thing. It’s a mix of economic and political uncertainty.

Heightened trade tensions, aggressive new tariffs, public pressure on the Federal Reserve, and ambiguity around future rate cuts have all contributed. That cocktail of risk has pushed investors to the sidelines and sent volatility soaring.

But what everyone wants to know is, “When will things turn around?”

Of course, we don’t have a crystal ball. And you’ve heard this more than a few times before, but it’s worth repeating: past performance doesn’t guarantee future results. Markets don’t always follow historical patterns, and downturns can deepen before recovery begins. Still, looking at long-term data can offer some much-needed context and perspective.

For starters, markets tend to fall fast.

Historically, based on data from over a century of S&P 500 returns, adjusted for inflation and including dividends, it has taken as little as six months for a 20% decline to reach its bottom. Even deeper drops, like 40% or 50%, have often found their low point in under two years.¹

But getting back to where we started? That takes longer. Much longer.

On average, a 20% drop has historically taken about four years to recover. A 30% decline stretches to over seven years. A 40% drawdown? Nearly nine.²

These numbers reflect the real emotional challenge of investing, not just the drop itself, but the long, patient climb back to previous highs.

In other words, recoveries are less like flipping a switch and more like repairing a home after a storm. The damage can be done quickly, but rebuilding confidence, earnings, and momentum takes time.

I’ll admit, it can be surprising how long it can take for markets to fully recover.

Since the end of the Great Financial Crisis, we’ve been fortunate. U.S. markets have generally bounced back quickly from declines, sometimes in just months. That kind of speed can create a false sense of how recoveries typically work.

But when you zoom out and look at a broader stretch of market history, it becomes clear that fast recoveries are the exception, not the rule.

Over nearly a century of S&P 500 data, the pattern is clear. Deep declines often take years, not months, to fully heal. And for investors who have only experienced the post-2008 era, this longer timeline can feel unexpectedly drawn out.

That said, there is reason to remain encouraged.

Historically, some of the strongest returns have come after the most difficult periods. Following the 10 worst calendar years since 1975, the S&P 500 delivered an average return of 17.5% one year later, compared to its average one-year return of 9.7% over the same broader time frame.

Over longer periods, the results are even more striking: an average 56% return after three years, and more than 200% after ten.³

Now we know you’ve heard this several times already, but here it is again: Past performance doesn’t guarantee future results. Markets don’t move in straight lines, and downturns can deepen before a recovery begins. Still, history provides helpful context, and it reminds us that long-term discipline has often been rewarded.

So what can you do right now?

Here are a few time-tested best practices we apply on behalf of our clients when markets turn volatile:

Hunt for pockets of value: Look for areas of the market that may be undervalued or overlooked, where long-term potential outweighs short-term noise.
Keep a diversified portfolio: Spreading investments across regions, sectors, and asset classes reduces your exposure to any single area.
Avoid trying to time the market: Staying invested through downturns can yield better results than jumping in and out based on emotion.
Rebalance when needed: Adjusting your mix of stocks and bonds can help manage risk and keep your plan aligned with your goals.
Consider downside protection: In some cases, alternative strategies or specific investment products can help buffer volatility.

We can’t avoid market declines, but we can prepare for them, navigate through them, and stay focused on long-term outcomes.

Sources:

1. Shiller Data, 2025 [URL: https://shillerdata.com/]
2. Shiller Data, 2025 [URL: https://shillerdata.com/]
3. Market Declines: A History of Recoveries, 2025 [URL: https://www.mfs.com/content/dam/mfs-enterprise/mfscom/sales-tools/sales-ideas/mfse_resdwn_fly.pdf]

Chart sources:
Shiller Data, 2025 [URL: https://shillerdata.com/]

What’s next for markets and the economy?

Markets have been on a roller coaster, and investors are asking:¹

Is a bear market on the way?

Let’s dive into what’s happening and what it might mean for your portfolio.

What’s driving these market swings?

In a word: uncertainty.

Anxiety over a potential trade war is causing a significant shift in business sentiment, with many corporate leaders bracing for a potential recession later this year.²

It’s a dramatic (and concerning) change from the outlook just a few months ago.

Three key worries seem to be driving markets:

1. Tariff uncertainty is causing anxiety – Analysts are concerned that widespread tariffs could increase costs and disrupt many industries.

However, recent remarks from the administration hint at a more flexible approach to negotiations that could blunt the full impact of tariffs.³

2. Sticky inflation persists – Many economists don’t expect us to hit the Fed’s 2% target until 2026 or later.²

If inflation doesn’t moderate, the Fed may get cold feet about lowering interest rates further.

3. Consumer spending is slowing – Fresh data shows Americans are tightening their belts as inflation and economic worries bite.⁴

Since consumer spending drives nearly 70% of the economy, this pullback raises real concerns.

Are there potential bright spots despite the noise?

The recent market bounce tells us something important: investors are ready to respond positively to policy clarity.

The push to strengthen domestic production could also unlock new opportunities in some sectors of the economy.

Our job is to spot those opportunities and stay nimble enough to use them when they emerge.

What could this mean for your portfolio?

Market volatility can be unsettling, especially alongside economic uncertainty. It’s perfectly normal to feel concerned when headlines turn gloomy.

We don’t know what will happen next, but I know this: Emotional reactions to market movements often lead to missed opportunities.

If you’re worried about what’s going on, please reach out—our role is to be your guide, thought partner, and a source of reassurance and perspective.

Your investment strategy was designed to account for market fluctuations.

Sources:

1. https://www.cnbc.com/2025/03/24/stock-market-today-live-updates.html

2. https://www.cnbc.com/2025/03/25/recession-is-coming-pessimistic-corporate-cfos-say-cnbc-survey.html

3. https://www.cnbc.com/2025/03/25/cnbc-daily-open-trump-winks-at-gentler-tariffs-boosting-markets.html

4. https://www.reuters.com/world/us/us-consumers-slow-spending-inflation-bites-synchrony-says-2025-03-25/

Navigating Financial Uncertainty Amid Federal Layoffs

We know the news surrounding federal layoffs is unsettling, and if you’re feeling uncertain about what comes next, you’re not alone. Change like this can be overwhelming, but please know that you have options and support. Our goal is to help you navigate this transition with clarity and confidence so you can make informed decisions for yourself and your family.

Why Is This Happening?

The federal workforce is experiencing significant changes due to budget reductions, workforce restructuring, and a shift toward modernization. Recent reports indicate that the Trump administration may require agencies to submit layoff plans by March 13, 2025, as part of an effort to cut costs and streamline operations.¹

While these changes may feel sudden, they are part of a broader restructuring of government agencies.

What You Can Do Now

While you may not be able to control these changes, you can take steps to protect your financial future:

Stay Informed: Keep up with official communications from your agency regarding layoff plans.
Know Your Rights: Review federal RIF procedures and understand what benefits and options are available to you.
Update Your Resume and Skills: Consider refreshing your resume and exploring new skills that could open up additional career paths.
Plan Financially: Now is a good time to review your finances, build an emergency fund, and look for ways to reduce expenses in case of job loss.

Managing Your Thrift Savings Plan (TSP)

If you separate from federal service, you may still have options regarding your TSP, such as adjusting allocations, rolling funds into another qualified plan, or keeping your account active.²If you have an outstanding TSP loan, you may need to explore repayment options. In some cases, unpaid loans could be treated as taxable distributions.³

We know this is a lot to process, but you don’t have to navigate it alone. If you have any questions or would like to talk through your financial options, we’re here to help.

Sources:

1. Politico, 2025 [URL: https://www.politico.com/news/2025/02/26/trump-administration-federal-agencies-mass-layoffs-00206222]

2. Plan Sponsor, 2025 [URL: https://www.plansponsor.com/what-happens-to-federal-workers-thrift-savings-plan-assets-after-being-terminated/]

3. TSP.gov, 2025 [URL: https://www.tsp.gov/publications/tspfs29.pdf]

AI bubble burst? What’s next

After reaching new record highs in recent weeks, markets plunged on worries that cheaper AI competition from China could pose risks to U.S. tech companies.¹

What caused the market reaction?

Let’s dive in.

What caused the tech market crash?

Much of the market run-up over the last two years has been driven by AI mania, with U.S. companies leading the charge.

However, this narrative faced a test when DeepSeek, a Chinese tech startup, released an advanced (much cheaper) AI model.

DeepSeek claims it was able to develop its advanced model for just $6 million using fewer hard-to-find computer chips, compared to the hundreds of billions collectively invested by U.S. rivals to develop their own AI models.¹

If the buzz around DeepSeek R&D numbers turns out to be more than just hype, it raises questions about the efficiency and competitiveness of U.S.-based AI firms.

Why are AI models so expensive to train?

That is the trillion-dollar question.

The rising costs of AI development have been a key focus for investors.

Capital spending on AI model development is soaring, driven by the cost of the massive computing power needed to analyze data.²

The chart below shows the estimated costs to train some of the major models released over the last few years.

One major tech CEO estimated that training advanced AI models could cost anywhere from $10 billion to $100 billion.³

In contrast, DeepSeek claims to have developed its model for a fraction of the cost by using innovative ways to process data using fewer resources.

If their approach is validated, it shows that there may be alternative paths to AI innovation that require less upfront investment.

What will this AI “space race” mean for U.S. AI companies?

While the long-term potential for AI could be massive, it’s still a very new technology with a rapidly evolving landscape and not a lot of return to show for substantial investments.⁴

If DeepSeek’s approach can be replicated, the disruption could benefit the sector by making it faster and cheaper to release new models.

The new pressure would also force competitors to become more efficient in their operations.

Will the tech selloff trigger a bear market?

Market adjustments like this are not unusual, particularly after periods of strong performance.

Stocks have been riding high on soaring tech firm valuations, and the pullback could be the reset the sector needs to return to Earth.

Looking ahead, we can expect more volatility as investors adjust expectations and digest new data.

Bear markets are always a risk, and it’s wise to stay flexible and be prepared for one to strike.

That said, we see plenty of growth opportunities ahead despite the short-term uncertainty.

As always, we’re watching closely and monitoring trends.

Sources

1. CNBC, 2025 [URL: https://www.cnbc.com/2025/01/27/how-the-buzz-around-chinese-ai-model-deepseek-sparked-a-massive-nasdaq-sell-off.html]

2. Stanford, 2024 [URL: https://aiindex.stanford.edu/wp-content/uploads/2024/05/HAI_AI-Index-Report-2024.pdf]

3. IBD, 2024 [URL: https://www.investors.com/news/technology/ai-stocks-openai-artificial-intelligence-models-big-tech-google-meta/]

4. Goldman Sachs, 2024 [URL: https://www.goldmansachs.com/images/migrated/insights/pages/gs-research/gen-ai–too-much-spend,-too-little-benefit-/TOM_AI 2.0_ForRedaction.pdf]

Chart sources:

Stanford, 2024 [URL: https://aiindex.stanford.edu/wp-content/uploads/2024/05/HAI_AI-Index-Report-2024.pdf]

CNN, 2025 [URL: https://www.cnn.com/2025/01/27/tech/deepseek-stocks-ai-china/index.html]

Supporting You Through the LA Wildfires

Like us, I’m sure your heart goes out to all those affected by the wildfires in Los Angeles. Perhaps you or someone you know has been directly affected. If that is the case, please reply to let me know how you’re doing.

Wildfires can be so devastating — taking an immense toll on families, communities, and the broader economy. While natural disasters like these can challenge us in many ways, they also remind us of the incredible resilience of communities and the strength we find in coming together.

While recovery takes time, we have witnessed how both people and economies can rebuild and emerge stronger. We certainly hope for this on behalf of all our friends in the L.A. area!

The economic impacts of the fires are also significant, and understanding them can help us prepare for what’s ahead:

Economic losses: Estimated to be between $52 billion and $57 billion, these wildfires represent a massive financial impact that may ripple through the broader U.S. economy.¹
Insurance industry: Insured losses are projected to approach $10 billion, placing pressure on insurance providers like AIG and Chubb, particularly those serving high-net-worth clients.¹
Stock market: Utility and insurance stocks have already reacted to the fires, leading to potential volatility in these sectors.²

While these numbers reflect the financial toll, they don’t tell the full story of the lives and communities impacted. For those affected, there are resources and strategies to help ease the burden. We are encouraging everyone we know in the area to:

Prioritize safety: Follow evacuation orders immediately if issued for your area.
Reach out for immediate assistance: Connect with services like the Red Cross or local disaster relief organizations.³
Apply for federal aid: Apply for recovery assistance through the Federal Emergency Management Agency (FEMA) at DisasterAssistance.gov.
Explore tax relief options: Such as property tax relief and other benefits available to California residents.⁴
Document damages for insurance claims to ensure you’re receiving the support you’re entitled to.

If you have any questions about how these events might affect you, your loved ones, your financial plan or even your future, we’re here to help. Feel free to reach out anytime.

In times like these, it’s clear how important it is to focus on what matters most: our health, our loved ones, and the communities that keep us strong.

Wishing you safety and peace,
The NorthStar Team

Sources:

1. Investor’s Business Daily, 2025 [URL: https://www.investors.com/news/top-california-property-insurer-earns-double-upgrade-from-goldman/]

2. Investor’s Business Daily, 2025 [URL: https://www.investors.com/news/california-palisades-fire-update-stock-market-impact/]

3. Red Cross, 2025 [URL: https://www.redcross.org/about-us/news-and-events/press-release/2025/red-cross-helping-in-southern-california-as-wildfires-force-thousands-from-their-homes.html]

4. California BOE, 2025 [URL: https://www.boe.ca.gov/proptaxes/disaster-relief.htm]

What will the new administration do first?

Now that the election is over, what will the new administration prioritize in the new year?

Here are a few things we’re watching in the months ahead:

The debt ceiling debate may reignite in early 2025.

The debt ceiling, the cap on the total amount of debt the U.S. can hold, has been suspended as part of a deal made in the last Congressional fight.¹

When the cap returns in January, it may kick off a fresh round of debates and draw attention to the more than $35 trillion the U.S. holds in debt.²

Will lawmakers take action to stem deficit spending? Or will they continue to kick the can down the road?

We’ll have to wait and see.

Tax cuts may be extended past 2025.

A number of popular individual and small business tax breaks are scheduled to expire at the end of 2025, which would trigger higher individual income tax rates and increase estate taxes.³

President-elect Trump may extend or make some or all of these provisions permanent as part of his 2025 priorities.

However, tax cuts lead to lost revenue for the federal government, which would end up adding to the national debt.

It’s hard to know how lawmakers will square these competing priorities, but we’re keeping a close eye on it and will keep you informed.

Tariffs could become a key issue for businesses.

The new administration has announced plans for broad tariffs on imports, especially on goods from China.⁴

Tariffs can impact inflation and business earnings by increasing the cost of goods and supplies from overseas.

If trading partners respond by adding their own tariffs on U.S. goods, it could hurt overseas demand by making our products more expensive.

How deep or broad those tariffs could be is a big source of uncertainty going into the new year.

However, it’s likely that any new policies would come with many rounds of debate, so the actual impact of tariffs may be much less than the worst-case scenarios.

We’ll keep you updated.

Markets may become volatile with uncertainty.

While the uncertainty of the election has faded, new uncertainty around policy priorities has replaced it.

We’re expecting volatility ahead as analysts digest reports and adjust their positions ahead of the new year.

Investors are also watching data for hints about where the economy is headed next.

The bull market is now over two years old. Should we be worried that a bear market is around the corner?

Probably not.

The chart below shows you the average age of recent bull markets.

While the past doesn’t predict the future, we can see that two years isn’t historically long for a bull market. In fact, the longest bull market on record lasted more than 12 years.⁵

A sudden turn to a bear market is not likely at this point.

On the other hand, there are a lot of risks in this environment that could shake things up.

If geopolitical issues flare, inflation rebounds, or the business environment starts to look dicey, we can expect markets to correct.

Sources:

1. https://bipartisanpolicy.org/blog/debt-limit-2025-treasury-cash-on-hand/

2. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/

3. https://tax.thomsonreuters.com/blog/what-to-know-about-tcja-expiration/

4. https://www.yahoo.com/news/trumps-proposed-tariffs-raise-prices-205300785.html

5. https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/10-things-you-should-know-about-bull-markets.html

Chart sources: https://finance.yahoo.com/news/the-bull-market-is-2-years-old-heres-where-wall-street-thinks-stocks-go-next-100050648.html?guccounter=1

*Current bull market as of 11/20/24

Can the bulls keep running?

The bull market has officially turned two.

Markets have also had an impressive run since the bottom of the bear market.

Since October 12, 2022, the S&P 500 has gained over 60%.¹

Can the bulls keep running?

Given the strong performance in 2023 and the strong 2024 we’re having, it’s reasonable to worry that markets might retreat.

You can see in the chart below that consecutive strong years have happened before.²

That said, past performance doesn’t guarantee that optimists will continue to drive markets.

In fact, it wouldn’t be a surprise to see a pullback ahead.

However, there’s reason to hope for continued optimism.

The bull run we’ve experienced this year has a strong grounding in economic factors.

Factor #1: A growing economy generally boosts markets.

While markets are often impacted by short-term trends and investor psychology, stocks generally follow the economy.

The latest data shows that economists are upbeat about where economic growth is headed.³

Since the stock market is forward-looking, that’s a positive for the bulls.

Factor #2: The Federal Reserve’s interest rate policy is loosening.

A big part of the market story this year is the hope that the Fed will be able to lower interest rates without causing inflation to spike or tipping the economy into recession.

Lower interest rates are generally positive for markets because they make it cheaper for firms and consumers to borrow money.

Lower corporate borrowing costs can fuel growth, R&D, acquisitions, and other capital-intensive projects that boost stock prices.

Factor #3: Optimism about corporate earnings.

While earnings season is still underway, the general consensus is that corporate earnings are looking solid so far.⁴

That’s great news for markets.

A recent survey of corporate leaders also found that the majority expect company profits to increase.⁵

Taken together, that’s a positive for the bulls.

However, there are a number of risks we’re watching.

With markets regularly testing new highs, stock valuations are also high.

That means some stocks may be overvalued.

If investors lose optimism about growth, markets will likely retreat.

Uncertainty surrounding American politics and global geopolitics is also high.

While elections and conflicts generally don’t have long-term effects on markets, they can certainly trigger selloffs.⁶

Overall, we’re still cautiously optimistic about where markets are going in the final months of the year.

It can be tempting to look at market highs and decide to sell and stand on the sidelines.

However, timing markets perfectly is impossible and you risk missing out on future growth.

Sources

1. https://finance.yahoo.com/news/the-bull-market-is-2-years-old-heres-where-wall-street-thinks-stocks-go-next-100050648.html

2. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

3. https://www.wsj.com/economy/economists-predictions-survey-charts-68ba82d6?mod=article_inline

4. https://www.nasdaq.com/articles/stocks-edge-higher-solid-corporate-earnings-boost-market-optimism

5. https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/survey-results-expectations-for-company-performance-by-industry

6. https://www.nytimes.com/2024/10/15/business/stock-market-valuation-outlook.html

Chart sources: https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

Impact of hurricanes

Are you well and safe?

Have any of your loved ones been impacted by Helene or Milton?

It’s been a rough couple of weeks for the Southeast.

Storms can take a massive toll on families and communities, with challenges that take months and years to resolve.

With an active hurricane season upon us, we’d like to take a moment to talk about how natural disasters can affect markets and the economy.

Natural disasters typically impact the economy in a few ways:

Regional, national, and even international supply chains can be disrupted as roads and ports close and goods struggle to move from place to place
Economic growth can slow down as businesses shut down, jobs are lost, and consumer demand slows down
Markets often experience short-term volatility as investors react to the news and rush to buy and sell
Energy prices may spike due to scarcity and supply disruptions

While some companies (such as insurers) typically take a hit from anticipated disaster losses, other businesses (like generator manufacturers) may see a spike due to expected demand.¹

This chart shows the financial cost of some hurricanes in the last two decades.

While natural disasters may have a severe short-term impact on local and regional economies, research suggests the long-term negative effects are limited.²

One note to consider: estimates of Helene and Milton damage may be low as it may take years to account for the full cost of property damage, business closures, and economic disruption.

Let’s also keep in mind that billions of dollars in financial losses are massive, but they’re still a drop in the bucket of the overall economy, which is over $27 trillion in size.³

Of course, the plain numbers don’t tell the full story of lives lost and lives disrupted.

Hard-hit areas may take a long time to recover, and some places may never fully return to normal.

In the weeks and months to come, we may see an impact from the hurricanes on inflation, unemployment, and growth data.

Sources:

1. https://www.cnbc.com/2024/10/07/generator-maker-generac-soars-insurance-stocks-fall-on-hurricane-milton.html

2. https://www.frbsf.org/wp-content/uploads/wp2020-34.pdf

3. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2023&locations=US&start=1960&view=chart

Chart sources: https://www.investors.com/news/hurricane-helene-34-billion-price-tag-stock-market-impact/

https://www.cnbc.com/2024/10/08/hurricane-milton-could-cause-as-much-as-175-billion-in-damages-according-to-early-estimates.html

https://www.kiplinger.com/slideshow/business/t019-s001-most-expensive-natural-disasters-in-u-s-history/index.html