L.A. County Inferno Expected To Top $250 Billion In Losses

A week after a devastating inferno leveled large swaths of Pacific Palisades and Altadena to ash, Los Angeles County remained under a severe fire threat on Wednesday morning. Residents have been left in a state of shock, expressing frustration over what many see as possible negligence by county and/or state officials to mitigate the spread of the fires. The fires have become the region's worst fire disaster in history, with new damage and economic loss estimates between $250 billion and $275 billion, according to AccuWeather. 

"These fast-moving, wind-driven infernos have created one of the costliest wildfire disasters in modern U.S. history," AccuWeather Chief Meteorologist Jonathan Porter said, adding, "Hurricane-force winds sent flames ripping through neighborhoods filled with multi-million-dollar homes. The devastation left behind is heartbreaking, and the economic toll is staggering."

AccuWeather predicted economic damages between $250 billion and $275 billion had eclipsed inflation-adjusted damages of $200 billion from Hurricane Katrina, according to JPM analysts. 

"Nonetheless, we think the short-term effect on national GDP growth, employment, and inflation will be small, though this could change if the fires worsen substantially," the analysts said. 

At the end of last week, AccuWeather estimated total economic damages to be around $150 billion, while analysts from other desks expected insured losses north of $20 billion. 

The analysts noted, "That is a significant volume of insured losses, but it also suggests the majority of economic losses are uninsured." 

The concentration of wealth in Pacific Palisades is high. According to IRS data analyzed by JPM, the average home in the area is valued at $3.5 million, yet more than half of tax returns report an adjusted gross income under $200,000. In Altadena, where the average home value exceeds $1.2 million, over 80% of tax filings show incomes below $200,000, with more than 60% reporting less than $100,000.

"Construction costs will be lower than home values though: in 2019, Redfin estimated that land value was 60% of the price of a home in Los Angeles, the highest share among any major metro area," the analysts pointed out. 

As of Wednesday morning, many parts of Pacific Palisades, Malibu, Calabasas, Brentwood, and Encino remain under evacuation orders or warnings. At least 12,000 building structures have burned, displacing thousands of households. 

Here's the latest information on the fires (courtesy of L.A. Times):

Palisades Fire:

Burned 23,713 acres and numerous homes, businesses and landmarks in Pacific Palisades and westward along Pacific Coast Highway, toward Malibu. As of 7:00 a.m. Tuesday morning, the fire was 17% contained, up from 14% early Monday. Many parts of Pacific Palisades, Malibu, Calabasas, Brentwood and Encino are under evacuation orders or warnings. More than 12,000 structures remain threatened. Santa Monica has downgraded its mandatory evacuation orders to warnings. Officials estimate that more than 5,300 structures, including many homes, have been damaged or destroyed.

Eaton Fire:

Burned 14,117 acres and many structures in Altadena and Pasadena. As of 7 a.m. Tuesday morning, the fire was 35% contained, up from 33% early Monday. Officials say 7,000 structures have been damaged in the fire. Most of Altadena was under an evacuation order, as was unincorporated Kinneloa Mesa. In Pasadena, a mandatory evacuation order was in place in the northern half of the neighborhood of Hastings Ranch. In Sierra Madre, mandatory evacuations were in effect in some areas north of Grand View Avenue, and voluntary evacuations were in place in other portions of the city.

Latest Zero Hedge headlines:

• 10 Dead, 10,000 Structures Burned In Los Angeles Area Inferno As Fire Damage Could Exceed $150 Billion

• "Do Not Panic Buy": Officials Urge Calm As LA Fire Crisis Disrupts Main Fuel Pipeline To Las Vegas

• "We're Not Screwing Around": L.A. Sheriff Declares Curfew Amid Arson & Looting Chaos

• California-Based Insurer Crashes Amid Billions In LA Area Fire-Damage Losses

• Arson Threats A "Major Issue" In Wildfire-Ravaged Los Angeles County

• California Imposes 1-Year Insurance Cancellation Freeze In Areas Ravaged By Wildfires

• Palisades Fire Crisis Intensifies Ahead Of Windstorm Event Early Next Week

• Three Military Humvees, Machine Gun Mounts, Stolen Outside Of Los Angeles

• Palisades Fire Threatens New Upscale Communities As Santa Ana Winds Return

• California's Insurance Crisis Just Got A Whole Lot Worse

• AP News Heavily Ratioed For Blaming Palisades Fire On Climate Change

• Why Was Pacific Palisades Reservoir Empty? It Gets Worse...

• L.A. Residents Sue Edison Utility Over Potential Role In Palisades Fire

• Blaming 'Climate Change' For LA Fires Only Makes Newsom Look Criminally Incompetent

• Return Of Strong Winds Spark "Dangerous Situation" Across Fire-Ravaged Palisades

• Wildfire Woes: California Regulators Halted Palisades Fire Prevention Project to Save Rare Shrub

Headlines via L.A. Times (local paper not thrilled with mayor & other city officials who failed the taxpayers): 

• L.A. fire officials could have put engines in the Palisades before the fire broke out. They didn't

• Mayor Karen Bass was at embassy cocktail party in Ghana as Palisades fire exploded

• L.A. City Council seeks transparency on empty reservoir, dry fire hydrants

• A week after the L.A. firestorms began, the threat continues as the unprecedented losses sink in

Wonder why...

The total economic cost of the fires is likely to move higher as containment levels remain low and rebuilding efforts are expected to take years. The financial burden of reconstruction will likely be shared among local and federal governments, insurers, and residents.

On Monday, Palisades homeowners sued the city of Los Angeles' electric and water utility for not supplying enough water to firefighters. The plaintiffs claim that a reservoir in the area was drained, causing low pressure in fire hydrants.

Soaring insured and total economic costs only means taxes and insurance are expected to jump for residents.