EconomicFallout from the Midwest Storms

The storms that have ravaged the Midwest over the past week will have far reaching economic impact on the entire country.

While the storms appear to be a local problem on the surface, the entire country will feel the devastation in their wallets.

The Midwest is a large farming area. Flooding abounds in many cities, towns and villages across the Midwest, with not much relief in sight. Among those areas flooded are farming fields, most of which already had crops planted. These crops will not come to fruition this year. This has the potential of millions of dollars lost in the harvest, along with higher prices at the grocery store.

Crops that have been lost, or at least highly diminished include corn, soybeans, carrots, onions, potatoes and wheat. These are basic crops that are used in many foods, and are sold on their own. The significant loss of crops will most likely result in much higher prices in the stores.

The flooded roads and towns present another problem in the form of transportation. With many major highways closed, it is more difficult for shipping companies to get their trucks through and loads have to wait or take longer to get to their destination due to detours. Some companies are not able to get to their destinations to pick up perishable merchandise in a timely fashion, and end up losing the products.

Wisconsin Dells is a large tourist area in the central portion of Wisconsin. Summer is the largest tourist time of the year, and many of the tourist attractions are centered around the water. During the first wave of storms, Lake Delton, the site of a main attraction in Wisconsin Dells suffered erosion and the entire lake drained. Another attraction, the Original Wisconsin Ducks, are being used to evacuate stranded flood victims. Without these large attractions open, tourism will drop. This will result in the lay-off of workers and another economic impact on the community.

In addition to the loss of revenue from these industries, the economic impact of the loss of property will be in the millions of dollars. Without a separate flood insurance policy, much of the damage will not be covered by standard home insurance. This will leave many in a horrible financial situation. Imagine making thousands of dollars of repairs to your home that you have to take out a home loan for. For many who are struggling to make their mortgage payments as it is, this may be the final breaking point.

If the Federal Emergency Management Agency (FEMA) does declare the Midwest is eligible for federal assistance home and business owners will begin to apply for assistance. FEMA assistance is not "free" money. It is a low interest loan from the federal government. The homeowners affected will have to repay this loan on top of their existing home loans. This is a better option than the traditional home loan since the homeowner can get a lower interest rate, but it is still an additional financial burden to already strapped budgets.

All of this means that the thousands of families affected will not have the disposable income that they may have had prior to these storms. It is less money being put back into the economy for luxury or fun items.

For those losses that are covered by insurance, it means a large catastrophic payout by the insurance companies. This results in increased premiums for everyone that the insurance companies provide coverage to.

In one way or another, these storms will have an impact on our already stressed economy.