The U.S. has two hurricane seasons: the Atlantic hurricane season from June 1 to November 30 and the eastern Pacific hurricane season from May 15 to November 30. In this article, we will be focusing on the Atlantic hurricane season, especially its impact on businesses in the coastal areas of Mississippi.
The Atlantic hurricane season sees storms forming out of not only the Atlantic Ocean but also the Gulf of America (or the Gulf of Mexico) and the Caribbean Sea. According to the National Hurricane Center (NHC), the U.S. experiences an average of 10 hurricanes, three of which are major hurricanes or hurricanes classified as Category 3, 4, or 5 on the Saffir-Simpson Hurricane Wind Scale.
Because hurricanes originate from these bodies of water, it isn’t surprising that landfalls cluster along the Gulf and South Atlantic coasts. States like Texas, Florida, Georgia, Louisiana, and Georgia all regularly feature in top 10 lists of states most prone to hurricanes, such as this one. Mississippi, too, isn’t far behind. All have to endure one of nature’s most powerful storms and their accompanying strong winds, heavy rainfall, and storm surge flooding.
For businesses along Mississippi’s coasts, in particular, the impacts of hurricanes can be seen and felt in various ways. (Note that we will mostly be focusing on Hurricane Katrina’s impacts on businesses in the Magnolia State. Hurricane Katrina was the costliest natural disaster in the history of the United States.)
Commercial Seafood & Fisheries
Hurricane Katrina made landfall in Mississippi in late August 2005. In the aftermath, entire beachfront communities were washed away by a record storm surge.
The state’s waterfronts also took a hit, with the tropical cyclone damaging docks, processing plants, and commercial fishing fleet, and recreational boating assets. This, along with storm surges and debris, disrupted the operations of seafood processing plants, live-bait dealers, commercial fishing fleets, marinas, and retail establishments.
A total of $352.81 million worth of direct damages afflicted the commercial seafood and fisheries industry along with marinas, for-hire charter, and recreational boating fleets. Below is the breakdown of these losses and damages:
| Types of losses and damages | Direct losses and damages ($M) |
| Direct loss to commercial fishing | 35.6 |
| Damages to commercial fishing assets | 35.3 |
| Direct losses to seafood processing | 81 |
| Direct losses to seafood processing assets | 77.8 |
| Direct losses to seafood wholesaling | 42.4 |
| Damages to seafood wholesaling assets | 21.3 |
| Direct losses to seafood retailing | – |
| Damages to seafood retailing assets | – |
| Direct losses to livebait assets | 2.9 |
| Damages to livebait dealers’ assets | 4.2 |
| Direct losses to marinas | 5.1 |
| Damages to marinas’ assets | 41.4 |
| Direct losses to charter boats for hire | 3.6 |
| Damages to charter boats for hire assets | 2.2 |
Source: Mississippi State University Coastal Research & Extension Center
Meanwhile, commercial fishing businesses were expected to lose over $61.8 million due to lost seafood markets from Katrina compared to the 2004 benchmark of $43.8 million. The study’s cohort of fishermen reported an average of $83,054 per fishing unit in 2004, and below are the sales they lost due to the hurricane:
Gross Sales Lost Due to Lost Market Channels
| County | Number of units | Percent of gross sales lost | Percent of crew members lost |
| Hancock | 220 | 83.6 | -90.3 |
| Harrison | 418 | 72.8 | -75.4 |
| Jackson | 326 | 63.0 | -76.8 |
| Other Counties | 66 | 36.0 | -66.7 |
| All Counties | 1,030 | 72.3 | -78.6 |
Source: Mississippi Agricultural and Forestry Experiment Station (MAFES) Bulletin 1165
Gulf Coast Casinos
Aside from the damage and loss to the commercial seafood and fisheries industry, Hurricane Katrina also wreaked havoc on Mississippi’s coastal tourism and gaming sector. This was primarily brought about by the destruction of waterfront lands, infrastructure, and waterways or the real property that are used for water-dependent commercial activities.
Before Katrina, casinos in “the playground of the South” floated on the water. When Katrina hit, a storm surge that was 24 to 28 feet high erased beach homes from the coast and tossed aside these massive casino barges, plus flooding moved them several blocks up or hundreds of yards inland.
“Seeing these barges, that we opened up on water, sitting up on land, had one sitting on top of a Holiday Inn,” recalled Larry Gregory, the Mississippi Gaming Commission’s executive director.
A dozen casinos plus one that was about to open were damaged or destroyed. The Gulf Coast casino sector was crippled for months.
Prior to Katrina they provided employment for around 17,000 people and generated $500,000 a day in state and local taxes. Post-Katrina, casinos employ about 16,000 workers and generate approximately $2.5 billion annually.
Here’s a snapshot of the slot machines operating one month before Katrina hit casinos in the Mississippi Gulf Coast, several months after, and more than a year after.
Mississippi Gulf Coast casino slot machine positions, casinos affected by Katrina
| Casino/Slot Positions | July 2005 | Dec. 2005 | Oct. 2006 |
| Beau Rivage (Biloxi) | 2,217 | – | 2,017 |
| Boomtown (Biloxi) | 1,052 | – | 1.388 |
| Casino Magic (Biloxi) | 1,177 | – | – |
| Copa Casino (Gulfport) | 1,354 | – | – |
| Grand Casino (Biloxi) | 2,610 | – | 838 |
| Hard Rock Casino (Biloxi)a | 1,500 | – | – |
| Hollywood (Bay St. Louis)b | 1,206 | – | 915 |
| Imperial Palace (Biloxi) | 1,484 | 1,885 | 1,999 |
| Island View Casino (Gulfport)c | 2,060 | – | 1,032 |
| Isle of Capri (Biloxi) | 1,184 | 728 | 1,333 |
| New Palace (Biloxi) | 1,189 | 827 | 849 |
| Silver Slipper (Biloxi) | 860 | – | – |
| Treasure Bay (Biloxi) | 973 | – | 228 |
| Total Slot Positions | 17,366 | 3,440 | 10,599 |
Source: Walker, D. M. & Jackson J. D. (2009). Katrina and the Gulf States Casino Industry. Journal of Business Valuation and Economic Loss Analysis, 4(2):9-9. DOI:10.2202/1932-9156.1030
aThe Hard Rock Casino was set to open the week Katrina hit. The rebuilt hotel/casino opened in July 2007, with 1,445 slot machines.
bThe Hollywood was named Casino Magic before Katrina.
cThe Island View was named Grand Casino before Katrina.
Employment & Unemployment
According to the Bureau of Labor Statistics, employment declined in Mississippi from the fourth quarter of 2004 to the fourth quarter of 2005. Hancock County and Harrison County saw a -26.2% and -19.6% decline in employment over the same period, representing the largest percent declines among the state’s counties.
Meanwhile, Gulfport-Biloxi-Pascagoula’s unemployment rate rose from 5.2% in August 2005 to 24.3% in September 2005, which was the largest unemployment rate increase after the hurricane. The area’s monthly unemployment rates stayed above 10% until May 2006.
Unemployment rates in Mississippi (not seasonally adjusted)
| Month | Unemployment rate (%) | Month to month change |
| July 2005 | 7.4 | |
| August 2005 | 7.4 | 0.0 |
| September 2005 | 9.4 | 2.0 |
| October 2005 | 9.1 | -0.3 |
| November 2005 | 8.9 | -0.2 |
| December 2005 | 8.3 | -0.6 |
| January 2006 | 9.1 | -0.8 |
| February 2006 | 8.6 | -0.5 |
| March 2006 | 8.0 | -0.6 |
| April 2006 | 7.3 | -0.7 |
| May 2006 | 7.4 | 0.1 |
| June 2006 | 8.0 | 0.6 |
| July 2006 | 8.3 | 0.3 |
Source: Bureau of Labor Statistics, Local Area Unemployment Statistics
Hurricanes in Mississippi & Their Effects on Revenues and Taxes
The Magnolia State is a significant region for storm activity. It has witnessed the formation of more than 50 tropical storms and over 30 tropical depressions. When it comes to major hurricanes, the state has experienced 19 landfalls, making it the top 7 state for major hurricane strikes in the country.
Coastal regions, especially the counties of Jackson, Harrison, and Hancock, are particularly at risk for these extreme natural events. All three are frequently subjected to hurricane-force winds, storm surge and flood conditions when a hurricane landfalls in the state. For instance, Hurricanes Isaac (2012), Gustav (2008), and Katrina (2005) all brought significant flooding to these coastal communities.
The August 2005 hurricanes, in particular, resulted in $4.5 billion lost revenue in the fourth quarter of 2005, while another study puts the loss estimates of business structures and equipment at $57.5 billion. The total estimated costs of the hurricanes ranged from $100 to $200 billion.
The state’s tax collection, too, dropped by 25% from $1.6 billion in the second quarter of 2005 to $1.2 billion in the third quarter. General sales tax declined by 29% while individual income taxes dropped by 34%. These two make up 73% of the taxes collected in Mississippi.
State Tax Collections in Mississippi 2nd Quarter 2005 to 1st Quarter 2006 (millions of dollars)
| 2005:II | 2005:III | 2005:IV | 2006:I | |
| Total | 1,643.5 | 1,226.1 | 1,447.4 | 1,508.4 |
| General sales tax | 759.9 | 578.2 | 769.4 | 801.0 |
| Gasoline tax | 112.8 | 111.5 | 114.8 | 107.8 |
| Public utilities | 0.0 | 7.9 | 0.0 | 0.4 |
| Corporations | 24.5 | 18.0 | 24.5 | 24.5 |
| Corporation income tax | 70.8 | 52.0 | 40.0 | 137.9 |
| Individual income tax | 432.2 | 286.1 | 303.6 | 217.9 |
| All other | 243.2 | 172.5 | 195.2 | 218.8 |
Source: The Gulf Coast: Economic Impact & Recovery One Year after the Hurricanes, October 2006, prepared by the Economics and Statistics Administration (ESA), U.S. Department of Commerce
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