The storm may cut economic output by $25 billion in the fourth quarter, according to Gregory Daco, a U.S. economist at IHS Global Insight in Lexington, Massachusetts. He said that could reduce the fourth quarter pace of growth to between 1 percent and 1.5 percent, from the firm’s earlier estimate of 1.6 percent.
Peter Morici, an economics professor at the University of Maryland's Smith School of Business, estimates Sandy will result in $35 billion to $45 billion in total losses. Eqecat, which does catastrophic risk models, projects $10 billion to $20 billion in total economic damages, about half insured.
The potential damage to homes from Hurricane Sandy-driven storm surges is likely to be greater than it was last year for Hurricane Irene, says Tom Jeffrey, senior hazard scientist for real estate market watcher CoreLogic. All told, nearly 284,000 residential properties valued at almost $88 billion are at risk for potential storm surge damage among the coastal Mid-Atlantic states, CoreLogic estimates.
What’s more, there are ways that the hurricane may boost economic growth. First, “there are all those batteries and loaves of bread purchased over the past two days might otherwise have not been purchased, and this increase in spending translates into higher GDP,” Wolfers notes. And the damage wrought by the hurricane “will yield even more spending re-paving roads, fixing downed electricity wires and rebuilding lost houses,” he adds — reconstruction efforts that will be funded by insurance payments and outside federal aid.
Reuters’s John McCrank and Rick Rothacker: “Wednesday is a key trading day because it marks the end of the month, when traders price portfolios. … Fears remained that wind damage and possible power outages could test the ability of markets to reopen. … The broad effects of the market shutdown were beginning to become more apparent by late Monday, as analysts estimated banks and trading firms could lose tens of millions of dollars in revenue.”
Nearly $7.8 billion is available for storm response through FEMA’s disaster relief fund, congressional aides said Monday. That includes more than $7 billion set aside in the stopgap spending bill that funds the federal government through March, as well as money designated for disaster relief carried over from last year that was not spent.
“Each day, the city generates upwards of $2 billion in economic activity. Some of that will be recovered later on but a portion of that is lost permanently, about $100,000 million to $200,000 million a day and that will result in probably $3 million to $5 million a day in lost tax revenues for the city,” New York City Comptroller John Liu told WCBS 880.
Most of Hurricane Sandy's economic impact will come from property damage, not lost work, Zandi said. Insurance companies can handle the losses, he added, since they are “well reserved and well prepared,” and their payouts still are likely to be below expectations for the year.
All major U.S. stock exchanges were shuttered Monday as areas around New York's Financial District came under a mandatory evacuation order. The shutdown was extended through Tuesday, marking the first time since 1888 that the exchange will have been closed for two consecutive days because of weather.
Sandy lashed a region with 60 million people -- about as many as Italy -- that accounts for about a quarter of the $13.6 trillion U.S. economy, estimates Eric Lascelles, the Toronto- based chief economist at RBC Global Asset Management Inc. It forced the closures of U.S. financial markets, halted air and rail service and idled workers for the federal and state governments from Virginia to Massachusetts.
The average cost of a year's worth of hurricanes on the U.S. economy in the last 80 years is 0.062% of GDP -- or just under $10 billion in today's dollars, according to "The Economics of Hurricanes in the United States," which looked at property damage. That's quite small. The nine most destructive hurricanes in U.S. history not named Katrina -- all since 2001, except for Andrew in 1992 -- cost between $9 and $30 billion. The estimated impact of Hurricane Katrina was nearly $100 billion.