The Atlanta Fed's Role in Understanding the Economic Impact of Natural Disasters

Atlanta Fed researchers strengthened the Atlanta Fed's ability to understand economic mobility and resilience conditions within communities through recent discoveries about Hurricane Michael's impact on one Florida county.

The deadly Hurricane Michael made landfall along the Florida Panhandle on October 10, 2018. Devastation in Bay County alone was enormous: five residents were drowned in a storm surge of up to 14 feet; an estimated $25 billion dollars in damages was reported; more than 1,500 structures were destroyed; and more than 45,000 structures and two hospitals were damaged by winds exceeding 160 mph at landfall, according to NOAA's report in 2019.

Through data analyses of this urban/rural county, a tourist destination anchored by Panama City Beach, Atlanta Fed researchers gained insights into the outcome of residents' decisions to move from the county after the storm.

Among other uses, this knowledge will inform the Bank's ongoing work to fulfill its responsibilities, under the Community Reinvestment Act (CRA), to encourage banks to meet the credit needs of their communities, including customers in federally designated disaster areas.

For instance, the Atlanta Fed may provide CRA consideration for community development loans or services in the southeast if the activities meet the requirements to revitalize or stabilize federally designated disaster areas. Examples could include a bank providing funding to a nonprofit organization helping to rehabilitate housing so individuals may remain in their homes, or funding construction of affordable housing to address increased demand in communities where victims of natural disasters have relocated.

In addition, the Atlanta Fed engages community stakeholders to produce research insights, connect practitioner and research networks, and highlight emerging and best practices across financial institutions and community organizations impacted by shocks and stressors. An example of connecting practitioners and research networks is when the CED team launched the Inclusive and Resilient Recovery series in 2020 after the COVID-19 shock. This series allowed the team to bring together researchers and practitioners that were addressing inclusive career pathways, household financial wellbeing, and small business recovery. These efforts are used to inform policy and practice across the Southeast.

Dontá Council, who joined the Atlanta Fed in 2020, works as a shocks and stressors subject matter expert for the Atlanta Fed's Community and Economic Development (CED) department. Council's research examines barriers to disaster-related recovery and preparedness, especially hazards affecting low- and moderate-income communities, defined as those earning below 80 percent of the area median income. The median household income was $64,700 in 2018 in Bay County, according to a report by the US Department of Housing and Urban Development that includes Bay County in the Panama City-Lynn Haven-Panama City Beach region.

Council conducted the latest research with Seumalu Elora Raymond, associate professor at Georgia Institute of Technology, and Pearse Haley, with the Atlanta Fed, for the discussion paper, "Through the Eye of the Storm: Post-Hurricane Migration in Florida's Panhandle."

Released in May 2025, the discussion paper includes the Atlanta Fed's analysis of data contained in the Federal Reserve Bank of New York's Equifax Consumer Credit Panel (CCP). The CCP is an anonymized 5 percent random sample of all individuals in the United States who have a credit record and social security number.

Researchers tracked individuals by their Census tract to determine if their credit report showed they had moved from Bay County during the three years following the storm. For a baseline comparison of out-migration elsewhere in Florida, the researchers chose Escambia County, home of Pensacola, because of its proximity to Bay County and because it was not affected by Hurricane Michael.

Results suggested that Bay County residents exposed to the storm were 3 percent more likely to move within the next year, 2019, and 3.8 percent more likely to move within the next three years following Hurricane Michael, compared to figures for Escambia County and when controlled for demographics. Bay County's estimated population in 2018 was almost 182,500. One anomaly in the moves from Bay County was that researchers didn't observe people returning to Bay County in the three years after the storm, as has been typical in other natural disasters.

Regardless of their destination, Bay County residents on average affected by the storm tended to move to neighborhoods that were more distressed than the pre-storm neighborhood from which they had moved. Disentangling these moves shows that, notably, people living in high-quality areas moved to even higher-quality areas. In contrast, those living in above-average deprivation areas moved to places that score even worse. Metrics of neighborhood deprivation include income/poverty, education, employment, housing, and occupation. These findings, and others, led researchers to conclude that policies could be shaped to achieve a recovery from a weather-related disaster that is more balanced.

The research also uncovered topics for possible future study, including, for example, the reason residents who lived in an area with a proportion of mortgaged homes tended to move to areas with more deprivation. Researchers found this to be counterintuitive, given that recipients of recovery lump sum payments from the Federal Emergency Management Agency (FEMA) can use them to reduce their mortgage balance. One possible answer is the presence nearby of foreclosed dwellings, which tend to depress the value of neighboring properties, as Atlanta Fed researchers observed in a 2019 working paper. Researchers behind this study also suggest that local policymakers and planners may pursue efforts to design policies that enable residents to pursue a more balanced recovery.

The Atlanta Fed has been researching the impact of hurricanes for more than 30 years. Much of the Sixth District is at risk from hurricanes, given the long coastline that stretches from Georgia, around the Florida peninsula, and across the coasts of Alabama, Mississippi, and Louisiana. Hurricanes also have caused destruction in inland areas of these states.

Other regional Reserve Banks have contributed to the Fed's body of disaster recovery research. The San Francisco Fed has published several working papers on the economic impact of regional natural disasters. One paper, "The Local Economic Impact of Natural Disasters," found that counties affected by FEMA-declared natural disasters often experience a longer-term boost in per capita income on average. Hurricanes and tornadoes tended to have positive long-term effects on local income compared to other disasters, but their effect on the wider region is nearly zero effect.

New York Fed researchers have created an interactive map that uses the Storm Events Database (SED) from the National Oceanic and Atmospheric Administration to translate damage reports, which are based on meteorological zones, into damage reports on individual counties. This enables the Bank to gain a deeper understanding of local economic losses after an individual shock or stressor. Other Banks have undertaken comparable studies, such as the Philadelphia Fed for flooding and the Kansas City Fed for public health and natural disasters.

The Atlanta Fed's 2024 discussion paper "Risk and Resilience: How Weather-Related Disasters Impact Economically Marginalized Communities," published a year prior to CED's Hurricane Michael migration study and also involving Council's research, found that low-income communities across the Southeast face multiple barriers to economic recovery from weather-related disasters. Study participants cited factors including a lack of savings, limited insurance, and chronic effects of disasters on economic viability that made recovery for marginalized communities difficult.

The discussion paper highlighted key preparedness risks at all levels: organizational, individual, community, and local economies. Because disadvantaged areas might face challenges at both the local and organizational levels, the paper suggests that long-term economic disaster preparedness and recovery initiatives are often hindered. The research draws on interviews with community development experts in the southeastern United States, who identified hurricanes, flooding, and extreme heat as their most pressing concerns.

The Atlanta Fed and other Reserve Banks deliver research and tools on weather-related disasters due to the scale of economic consequences for the overall economy and for households. The intent is to provide evidence to inform programming and policy responses. The Atlanta CED team has framed disaster recovery not just as a temporary response, but as a window into long-term economic resilience, exploring aspects of disaster-related economic recovery such as migration patterns.

CED's research has come a long way in recent years. In 1992, the Atlanta Fed's Community Affairs team published a lengthy perspective on the devastation wreaked by Hurricane Andrew across businesses and communities. Following Hurricane Katrina, in 2005, CED published articles including ones involving research into community needs and reports on state-by-state economic impact. The Bank named disaster planning and recovery a strategic priority in 2006.

This history of disaster-related economic recovery research and community and bank engagement is just one example of the role the Atlanta Fed plays in helping communities respond to economic challenges.

"As part of the broader Federal Reserve System, the Atlanta Fed plays a vital role in consolidating and disseminating research-driven insights on the economic impacts of weather-related disasters," Council said. "This collective knowledge can inform decision-making at all levels, from local to national, to support more effective disaster preparedness and recovery efforts."

For information about the Atlanta Fed's methodology in using HUD's framework regarding low- to moderate-income households, please contact Donta Council, CED Adviser, [email protected], or Pearse Haley, Quantitative Research Analysis Specialist, [email protected].