The Devastation of Hurricane Helene: The Fifth District

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The impact of Hurricane Helene is still reverberating across the Southeast with each day bringing new revelations of the catastrophic damage to communities in the Fifth District. After making landfall on Sept. 26 in Florida, the storm moved inland, bringing wind gusts and historic levels of rainfall that destroyed homes, businesses, landscapes, and critical infrastructure, and left some areas of our district unrecognizable. The loss of life - more than 230 people as of the writing of this post - makes Hurricane Helene the deadliest mainland hurricane in the United States since Hurricane Katrina almost 20 years ago. Meanwhile, the damage to property and disruption to business activity will only be fully understood in the coming weeks and months, as households and businesses struggle to rebuild. The harm to critical infrastructure such as roads and bridges, the reliance of much of the affected area on tourism, the low flood insurance coverage in most affected communities, and the geography of the region will pose unique challenges to the long recovery ahead.

The Damage of Helene

Hurricane Helene left a trail of devastation across several states in the Southeast. In the Fifth District, western North Carolina, upstate and western South Carolina, and Southwest Virginia were among the most severely impacted regions.

Figure 1: Rainfall Totals in SC, NC, and VA Depict Where the Storm Was Most Destructive

Note: Rainfall totals are taken between September 26-28.
Sources: U.S. Census Bureau, PRISM Climate Group, Tennessee Climate Office, ESRI, U.S. Geological Survey

Communities in western North Carolina were the hardest hit in the Fifth District. The mountainous terrain of the Southern Appalachians made the intense rainfall catastrophic¹, producing flooding and landslides that washed away homes, uprooted trees, and destroyed transportation infrastructure. Sections of both Interstate 40 and I-26 north of Asheville have been destroyed, making it currently impossible to travel via interstate from North Carolina to Tennessee (and vice versa). Repairs to these major interstates will take months, and I-40 will not reopen until late 2025, causing major disruption to travel and leaving many communities isolated. Search and rescue efforts have been hindered by inaccessible roads and mountainous terrain, which will prolong the rebuild and recovery, particularly in the most remote areas of the region.

In South Carolina, while property damage was less severe than many places in western North Carolina, the storm seriously damaged power infrastructure in the upstate region, causing major disruption to business activity and leaving nearly one million households and businesses without electricity. At the time of this post, power had been restored to most of the upstate and western South Carolina, however, many areas in Edgefield, Aiken, Greenville, Spartanburg, and Anderson counties continue cleanup efforts due to fallen trees and powerlines. The storm also devastated communities in Southwest Virginia. Flooding and wind gusts destroyed homes, roads, and businesses and left thousands of residents without access to power and clean drinking water. Severe damage to transportation infrastructure resulted in hundreds of road closures, creating both delays and major disruptions, and cutting off affected communities.

What Is the Economic Profile of the Affected Area?

Although the devastating nature of this storm on our Fifth District communities cannot be overstated, the size and contribution of each region to the overall state economy vary. In North Carolina, the FEMA-designated counties make up 13 percent of state employment (over 600,000 workers). In South Carolina, those counties make up more than half of employment in South Carolina (about one million workers). Meanwhile, the smaller affected area in Virginia comprises just 4 percent of employment (about 180,000 workers).² Additionally, each region's industry composition differs. For example, while western North Carolina relies more heavily on tourism and tourism-connected businesses, upstate South Carolina and Southwest Virginia have more manufacturing along with a strong presence in trade, transportation and utilities.

Figure 2: Areas Eligible for FEMA Individual Assistance

Notes: These counties were designated as eligible for individual assistance at the time of writing.
Source: FEMA, U.S. Census Bureau

Western North Carolina

The stunning landscapes and mountainous terrain of western North Carolina, as well as its bustling brewery and arts scene has made the region a growing tourist hot spot. In Buncombe County, which is home to Asheville - one of the metro areas most affected by Helene - the share of employment devoted to leisure/hospitality is now around 17 percent compared to the United States and North Carolina, which both average around 10 percent to 11 percent. Areas deeper in the mountains rely even more heavily on the leisure and hospitality industry. In counties such as Watauga, where the city of Boone is located, leisure and hospitality employment accounts for 28 percent of total employment. Altogether, more than 80,000 people were employed in the leisure and hospitality sector in the affected counties of western North Carolina in May 2024, or roughly 15 percent of the total workforce in that area.

Figure 3: The Share of Workers Directly Employed in the Leisure/Hospitality Industry in March 2024

Source: Bureau of Labor Statistics, QCEW, March 2024

Employment in leisure and hospitality is only part of the story when it comes to the impact of tourism on the western North Carolina economy. According to an Economic Impact Report by the Buncombe County Tourism Development Authority, 13.9 million people visited Asheville in 2023, generating $3 billion in direct spending and $4.3 billion in total economic impact. This spending benefits many businesses, particularly in the fall when the foliage is at its peak.

There are many examples of storm impacts to this region. Biltmore Village, one of Asheville's most frequented retail and dining areas at the entrance of the famed Biltmore Estate, suffered extreme damage by Helene after the nearby Swannanoa River rose to record levels and flooded surrounding areas. The River Arts District, a lively historic hub for arts and culture, featuring museums, art galleries and studios, is now unrecognizable. Chimney Rock, a mountain town at the base of the Chimney Rock State Park, faces a long road to rebuilding the town that attracts visitors to its scenic views and trails. Even less impacted attractions in western North Carolina are temporarily closed, as many are providing accommodations to individuals impacted by the hurricane and connected to recovery efforts.

The effect on western North Carolina is not limited to leisure and hospitality. Although many of the counties have an outsized employment presence in leisure and hospitality, well over 20 percent of employment in the entire affected region is in trade, transportation, and utilities, as well as about 20 percent in manufacturing. As another example, flooding has also threatened to disrupt the mining industry. Spruce Pine, North Carolina, is a major source of high-purity quartz, which is critical to semiconductor manufacturing. Since the storm, mines in the area have ceased operations with no clear date for reopening.

Upstate South Carolina

The economy in upstate South Carolina relies heavily on two industries: trade, transportation and utilities; and manufacturing, although there is still a high share of professional and business services. In fact, these two industries comprise about 40 percent of employment in the FEMA-designated counties. In some affected counties, these sectors comprise over 60 percent of employment. The impact of Helene on these counties will be clearer in the weeks and months to come, but undoubtedly, disruption to business activity has been caused by downed trees and power lines leading to inaccessible transportation networks and widespread power outages.

Southwest Virginia

In Southwest Virginia, there was extensive damage done to primary roads and infrastructure that connect the region to other Virginia counties and neighboring states. This will likely impact the region's sizable manufacturing and trade, transportation and utilities presence, which comprises over 40 percent of the region's total workforce, amounting to roughly 60,000 workers. In fact, although employment in the affected region is only about 4 percent of total employment in Virginia, it includes almost 10 percent of all manufacturing employment in the Commonwealth. Additionally, businesses that rely on commuters from neighboring counties and states will be impacted as well. For example, Grayson County is characterized as a "connected" region, meaning that there is a significant inflow and outflow of commuters to and from neighboring counties³. As such, access to reliable transportation networks is vital to maintaining business operations in this area and to providing its commuting workforce to other surrounding areas.

Southwest Virginia has also seen leisure and hospitality continue to grow over the last few years⁴. According to a 2023 report by the Virginia Tourism Corporation, the region generated 1.3 billion in visitor spending in 2023, increasing 8 percent relative to the previous year. Affected areas in the region that rely on their outdoor recreation offerings will also face significant disruption to their budding leisure and hospitality industry. For example, in Washington County, the popular Virginia Creeper Trail which welcomes over 250,000 hikers and bikers each year has sustained significant flood damage, which resulted in a temporary partial closure of the trail. Parts of the Blue Ridge Parkway also remain impassable.

Figure 5: Connectedness Will Matter to the Impact on Economic Activity in Affected Areas

Sources: U.S. Census Bureau, 2019 LODES, Stoney and Pinto 2022

Lack of Flood Insurance Poses a Risk to Household Balance Sheets

There are many, many stories of residents in North Carolina, South Carolina, and Virginia who saw their homes severely damaged or even washed away by flooding. In final estimates, CoreLogic projects that Hurricane Helene may cause up to $47.5 billion in property damage. In a region with limited flood insurance coverage, households and businesses will need assistance in the recovery - a need that might go beyond what federal support will automatically cover. This will be a particular challenge for households who are already in vulnerable financial positions.

The Ongoing Recovery

The scope of the loss incurred by households and businesses in Fifth District communities is difficult to grasp. As the recovery from Hurricane Helene continues in the weeks, months, and years to come, we hope to form a more complete understanding of its lasting impact on regional growth and household finances. This post will be the first of many on how our Fifth District communities rebuild after such a devastating weather event.

Views expressed are those of the author(s) and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.