Cost of Sandy cleanup may hit $50 billion
People wait in line to fill containers with fuel at a Shell gas station October 30, 2012 in Edison, New Jersey. Hurricane Sandy which hit New York and New Jersey left much of Bergen County flooded and without power. AFP PHOTO/Brendan SMIALOWSKI
At more than 900 miles across, Sandy was the largest tropical system ever recorded in the Atlantic Ocean. The widespread damage left behind is certain to have a huge financial impact.
Early estimates are that Sandy will have cost around $20 billion in property damages and up to $30 billion in lost business, reports forecasting firm IHS Global Insight.
That puts Sandy in contention for the most expensive US storm in history, 2005's Hurricane Katrina, which cost about $46.6 billion in damages, reports NBC News.
Ten states have so far declared a state of emergency. Roughly 7 million homes are without power and 70 percent of East Coast oil refineries are shut down, reports the New York Daily News.
New York City, one of the areas hardest hit by Sandy, produces about 10 percent of US economic output.
The short-term blow to the economy could reduce the third quarter economic growth by about 0.6 percentage points, IHS says. That would bring the growth rate down to 1 percent.
But an increase in economic activity from cleanup and rebuilding efforts could offset some of the losses.
“Hurricane Sandy will undoubtedly hit economic output in the short-term,” said Paul Ashworth, chief US. economist at Capital Economics told NBC News.
“(But) some of that output will be made up before the end of the current quarter, and when we factor in the boost to GDP growth from the cleanup, the overall economic impact is likely to be very modest.”
Ashworth told NBC that the 12 states that felt the effects of Sandy account for about 23 percent of national gross domestic product – or about $13 trillion a day in economic output.
Consumer spending is also likely to dip as residents in the Northeast focus on clean up and recovery.
“If people aren’t going to Broadway shows and restaurants and hotels all those businesses that rely on people spending money are going to take a hit for sure,” said Stephen Bronars, a senior economist at Welch Consulting in Washington told Bloomberg.
“People are still going to go out and buy a car or other durable goods they need, they’re just not going to do it this week. There will be winners and losers.”