Floodwaters receding into the Mississippi River and its tributaries will suck billions of dollars out of the Midwest's economy, though probably not as much as the 1993 flooding that devastated the region.
The impact on U.S. economic growth is expected to be small, but it is difficult to make accurate estimates because water still stands over farm fields, roads and in many homes. Forecasts call for more rain across the region through at least Saturday.
Federal and state agriculture officials say the real damage won't be known until after the fall harvest. A report due Monday from the Department of Agriculture should give the country its first glimpse of the damage to the corn and soybean crops.
The Farm Bureau has pegged Iowa's agricultural losses alone at roughly $3 billion, while Indiana agricultural officials estimate the state's losses at $800 million. Experts say it's too soon to estimate the losses in Illinois and Missouri, which are also big corn- and soybean-growing states.
The effects of snagged barge and freight traffic, and insurance claims by water-logged homeowners and businesses, will likely add billions to the financial toll.
All told, the natural disaster will deliver a serious but manageable blow to the U.S. economy, which is already beset by high food and energy prices, falling home prices and a tight credit market that is making people and businesses cautious about spending, economists said.
“It's just another thorn in the side,” said Douglas Porter, an economist at BMO Capital Markets. Porter predicted the floods would shave a few tenths of a percent off the country's annual gross domestic product, a measurement of all goods and services produced in the U.S.
By comparison, the country took a $22 billion hit 15 years ago, when the swollen Mississippi River left water standing in fields and streets for more than three months in some places. That decreased annual GDP by about 0.3 percent, Porter said – and that was barely noticeable to the economy as a whole.
One major difference today – and a caveat in economists' relatively benign forecasts of the floods' likely financial impact – is that the flooding of the country's fertile midsection comes against a backdrop of soaring grain and food prices.
“Probably the biggest area of concern will be agricultural losses,” said Rick Mattoon, an economist with the Federal Reserve in Chicago.
The Midwest provides the bulk of the nation's corn and soybeans, key crops used across a range of foods, from cereal to cakes and sodas, as well as the livestock industry's favored feeds. Iowa and Illinois, the country's No. 1 and No. 2 corn producers, last year accounted for just over a third of the country's 13.07 billion-bushel corn crop.
The flooding started in early June on the Mississippi River and some of its tributaries, as well as other Midwest rivers such as the Wabash in Indiana and Illinois. Days of heavy rain fell on a region already soaked by a cool, wet spring, sending the rivers out of their banks.