Los Angeles: Devastating wildfires sweeping through Southern California are expected to be the costliest in US history, both in terms of direct financial losses and long-term economic repercussions, experts warn. At least 27 people have been confirmed dead as the Los Angeles wildfires continue to cause massive destruction in the US state of California, with forecasts for more heavy winds expected to fuel the blazes in the days to come.

According to Anadolu Agency, preliminary damage estimates from the wildfires are in the tens of billions of dollars, with AccuWeather assessing possibly more than $250 billion in damages and economic loss from the L.A. wildfires. The two raging fires in the Eaton and Palisades areas have charred more than 40,000 acres of land, destroying over 12,300 homes, businesses, churches, and schools.

While the national economy is unlikely to experience substantial damage from the fires, the local Los Angeles economy faces significant short-term and long-term challenges. "Locally, there will be significant changes to the Los Angeles economy in the short term, the next few months, and longer term," Charles Nyce, a professor of risk management and insurance at Florida State University, told Anadolu. Nyce emphasized the lengthy recovery time, stating, "It is going to take a long time to recover. It will take years to rebuild that area."

Describing the ongoing fires as the costliest in the country's history, Tatyana Deryugina, an associate professor at the Department of Finance, believes the losses depend on how long the fires continue to burn. "I think it's fair to say that this is the costliest fire, at least in the last 100 years, and depending on how long it burns and how many more areas are affected, the damage and economic losses could rise much further."

Experts believe the infernos will have a significant impact on the economy of the country's second-largest city. "This will be a big deal for the local economy for sure, because there were a lot of people living in that area. A lot of people have had to evacuate and their jobs, their lives are disrupted and that's ongoing," says Deryugina.

According to economist Galina Hale, several business operations in the area are temporarily disrupted, with many establishments destroyed by the fire. "This means that people will lose their jobs and their incomes temporarily or permanently." A report by news organization CalMatters indicates that thousands of low-income and immigrant workers have lost their jobs in the L.A. fires, as they were employed by residents.

Directly impacted communities will suffer the most from the financial losses, says Hale, a professor of economics at UC Santa Cruz, outlining the industries to be affected the most. "The tourism industry is also going to suffer partly because there's a lot of smoke in the area, so this is not a particularly good time to visit Los Angeles." The film industry also faces disruptions, with some homes owned by actors destroyed and displacement affecting the area's activities.

Experts also highlighted the housing crisis that can unfold as a result of the disaster, with reports suggesting that more than 10,000 dwellings were damaged in the wildfires. Hale expects surging rentals and high construction costs. "In the immediate term, due to resulting increased demand for housing and construction, one should expect rising rents and increased construction costs."

In terms of recovery, Deryugina expects the rebuilding phase to take time due to high demand for materials and labor. Nyce predicts that at the individual household level, if the losses were uninsured, many households would not be able to recover, leading to significant financial setbacks.

The disaster has also put the spotlight on the insurance crisis, with experts warning that insurers may struggle to cover the extensive damages caused by the wildfires. Insurance companies are facing criticism for canceling tens of thousands of policies before the fires. According to Deryugina, "the insurance crisis preceded this current fire as many areas in CA that are prone to fire, flood, or both have already been dropped by most insurance companies."

Regarding the recovery and rebuilding, Deryugina says it will depend on how bad the fires will be in the end. Nyce suggests that while 10 years is a good estimate for the local economy to recover, nationally, it will not take that long. The recovery timeline will depend significantly on the kind and amount of emergency funds being deployed to the area, Hale says.