Superstorm predicted to cost US$50b eventually
Source: Agencies |
November 1, 2012, Thursday
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Print Edition
Print Edition
SUPERSTORM Sandy will end up causing about US$20 billion in property damages and US$10 billion to US$30 billion more in lost business, according to IHS Global Insight, a forecasting firm.
In the long run, the devastation the storm inflicted on New York City and other parts of the Northeast will barely nick the US economy. That's the view of economists who say a slightly slower economy in coming weeks will likely be matched by reconstruction and repairs that will contribute to growth over time.
The short-term blow to the economy, though, could subtract about 0.6 percentage points from US economic growth in the October-December quarter, IHS says. Retailers, airlines and home construction firms will likely lose some business.
The storm cut power to about 7 million homes, shut down 70 percent of East Coast oil refineries and inflicted worse-than-expected damage in the New York metro area. That area produces about 10 percent of US economic output. New York City was all but closed off by car, train and air. The superstorm overflowed the waterfront, flooded the financial district and subway tunnels and cut power to hundreds of thousands. Power is expected to be fully restored in Manhattan and Brooklyn within four days.
The New York Stock Exchange reopened for regular trading yesterday after being shut down for two days. There's no evidence that the shutdown had any effect on the financial system or the economy. But Jim Paulsen, chief strategist at Wells Capital Management, said further delays might have rattled consumers and dampened spending. "It's about confidence," Paulsen said. " ... It doesn't do any good to have another day with headlines saying the US can't figure out how to open its stock exchange."
Sandy will likely be among the 10 most costly hurricanes in US history. It would still be far below the worst one - Hurricane Katrina, which cost US$108 billion in 2005.
In the long run, the devastation the storm inflicted on New York City and other parts of the Northeast will barely nick the US economy. That's the view of economists who say a slightly slower economy in coming weeks will likely be matched by reconstruction and repairs that will contribute to growth over time.
The short-term blow to the economy, though, could subtract about 0.6 percentage points from US economic growth in the October-December quarter, IHS says. Retailers, airlines and home construction firms will likely lose some business.
The storm cut power to about 7 million homes, shut down 70 percent of East Coast oil refineries and inflicted worse-than-expected damage in the New York metro area. That area produces about 10 percent of US economic output. New York City was all but closed off by car, train and air. The superstorm overflowed the waterfront, flooded the financial district and subway tunnels and cut power to hundreds of thousands. Power is expected to be fully restored in Manhattan and Brooklyn within four days.
The New York Stock Exchange reopened for regular trading yesterday after being shut down for two days. There's no evidence that the shutdown had any effect on the financial system or the economy. But Jim Paulsen, chief strategist at Wells Capital Management, said further delays might have rattled consumers and dampened spending. "It's about confidence," Paulsen said. " ... It doesn't do any good to have another day with headlines saying the US can't figure out how to open its stock exchange."
Sandy will likely be among the 10 most costly hurricanes in US history. It would still be far below the worst one - Hurricane Katrina, which cost US$108 billion in 2005.
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