A Moody’s Analytics conference call assessing the economic impact of Superstorm Sandy was held on November 1st.
Here is a very brief synopsis of the call:
Hurricane Sandy interrupted millions of lives, cutting power and forcing businesses and financial markets to close, but its economic impact should prove temporary. The property damage and lost economic output will likely rank it among the most costly U.S. natural disasters. Fortunately, major facilities such as sea and airports, rail and road systems, oil refineries and cell towers appear not to have been significantly damaged.
The lost economic output will likely be made up over the coming weeks. Rebuilding, financed by insurance and government aid, will support more activity through the rest of 2012. The affected area is relatively affluent and most households and businesses are insured.
Economic output in the region between Greater New York City and Washington DC totals about $2 trillion per year, just about 13% of national GDP. At 250 working days per year, daily output in the region is worth about $8 billion. Two days of lost output and the resulting multipliers cost the economy about $20 billion. If the property damage totals about $30 billion and half is repaired and rebuilt by the end of December, there will be only a small negative impact on fourth quarter GDP. Rebuilding will continue into next year and lift GDP by a small amount in the first quarter.
Nevertheless, the storm will make weekly and monthly economic data more volatile. Expect dips in October retail and vehicle sales, unemployment insurance claims, and industrial production, but these will rebound by December. Homebuilding and residential repair will rise noticeably. Restaurant and casino sales will be hurt, but grocery stores will gain. General merchandise stores will lose business, but online retailing should get a boost.
