Superstorm Sandy has caused untold levels of disruption, fear and destruction and left lives devastated in its wake.
As the storm clouds pass and the floods begin to drain away America is left assessing not just the emotional and physical impact of the natural phenomenon but the damage its wrought on the economy as well.
Currently the Superstorm (which is being billed as potentially more economically destructive then Hurricane Irene) has caused an estimated 20 billion Dollars worth of physical damage alone.
In recent months there have been signs (such as the drop in unemployment) that the US economy is gradually healing. But all that has been achieved thus far could be rendered void by the Superstorm’s rampage.
US Financial markets may have only been closed for two days but the knock on economic effect of the ‘perfect storm’ is likely to last for months.
Sandy bore down on roughly 60 million people and, as an economist with RBC Global Asset Management Inc has estimated, these people account for roughly a quarter of the total US economy.
A senior economist with Washington based Welch Consulting noted: ‘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. 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.’
As the aftermath of the Superstorm has the potential to keep millions of people out of work for the foreseeable future it could cut US economic output in the fourth quarter by as much as 25 billion Dollars and slash same-store sales by up to 3 per cent.
Gregory Daco, economist with IHS Global Insight, was quoted as saying that the pace of growth in the fourth quarter could be reduced by anything from 1 to 1.5 per cent. His firm previously estimated a 1.6 per cent reduction.
An economist with a separate firm asserted that GDP in the fourth quarter could be lowered by 0.2 percentage point and the output cost could ring in at 30 billion dollars. Another commented: ‘The US economy should be dinged. This is an incredibly densely populated area, and it’s a source of a disproportionate share of US economic output.’
Of course some of the losses incurred can be balanced out during the reconstruction of damaged areas and a Bloomberg News survey has estimated that although Sandy may cut 0.02 percentage point from fourth quarter growth it will add 0.08 percentage point to growth in the first quarter of 2013.
The total amount of US lives lost in the natural disaster currently stands at forty.
As of 11:15 am
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