California's Economy May Get Post-Fire Boost - Barron's

Includes: ALL, CAA, KBH
by: Susan Lerner

California's worst wildfires in four years have wreaked more than $1B in damages, killed 22 people, and left more than 600,000 displaced -- yet Barron's says the destruction could prove a boost to the state's economy. "It's an oddity of economic accounting... but the sharp initial pain could possibly turn into long-term stimulus," Alan Gin, an economics professor at the University of San Diego, told the magazine. Some 3,000 homes destroyed will need to be rebuilt, which Barron's speculates will result in lots of work for contractors and carpenters. One economist said homebuilding would stimulate the economy for the next 6-12 months. Among those with a major presence in the state, Barron's notes, are Standard Pacific and KB Homes. Meanwhile, Lehman Brothers has said individual insurers should find costs manageable, even if they reach $3B. Allstate, with a 13.4% share, is the most highly-exposed publicly-held insurer. On the downside, Barron's says consumers across the country may see higher prices at the supermarket for items such as avocados, as San Diego County's agriculture industry also may take a hit.

Sources: Barron's
Commentary: Can Housing Be 'Rescued'?No Point in Bottom-Fishing the Homebuilders
Stocks to watch: KBH, SPF, ALL. Competitors: PGR, CTX, DHI, LEN. ETFs: XHB, ITB, KIE, PEC

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