Though hurricane Sandy will impact dozens of industries and cause billions in damages, experts say the economy should recover quickly with reconstruction after the storm.
The floor of the New York Stock Exchange is empty of traders, Monday in New York. All major US stock and options exchanges were closed Monday with Hurricane Sandy nearing landfall on the East Coast. Trading has rarely stopped for weather.
Richard Drew/AP
EnlargeAirlines have canceled thousands of flights, stranding travelers around the globe. Insurers are bracing for possible damages of $5 billion. Retailers face shrunken sales.
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Hurricane Sandy took dead aim at New Jersey and Delaware on Monday, with sheets of rain and wind gusts of more than 90 mph knocking out electricity and causing major disruptions for companies, travelers and consumers. But for the overall economy, damage from the storm will likely be limited. And any economic growth lost to the storm in the short run will likely be restored once reconstruction begins, analysts say. Americans may even spend more before the storm when they stock up on extra food, water and batteries.
Preliminary estimates are that damage will range between $10 billion and $20 billion. That could top last year's Hurricane Irene, which cost $15.8 billion. If so, Hurricane Sandy would be among the 10 most costly hurricanes in US history. But it would still be far below the worst ? Hurricane Katrina, which cost $108 billion and caused 1,200 deaths in 2005.
"Assuming the storm simply disrupts things for a few days and it doesn't do significant damage to infrastructure, then I don't think it will have a significant national impact," Mark Zandi, chief economist at Moody's Analytics, said Monday.
The economic impact could be more severe if the storm damages a port or a major manufacturing facility such as an oil refinery, Zandi noted.
The economy expanded at an annual rate of 2 percent in the July-September quarter. Zandi said he isn't changing his forecast for similar growth in the current October-December quarter of 1.9 percent. Economic activity in October and November might slow if factory output declines and some workers are laid off temporarily and seek unemployment benefits. But the economy could strengthen in December as companies rebound.
Here's how the storm has begun to affect key areas of the economy:
Air Travel
Flights in the Northeast are all but stopped for at least two days. Airlines have canceled nearly 12,500 flights for Monday and Tuesday from Washington to Boston. The disruptions spread across the nation and overseas, stranding passengers from Hong Kong to Europe.
Total airline cancellations have already surpassed those from Hurricane Irene last year and are on par with the 14,000 that were scrapped due to the snowstorm that pounded the East Coast early last year. The Airports Council International, a trade group, said that even if the storm damage turns out to be minor, it could be a week before operations are back to normal at major East Coast airports.
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My name is Reece, and I'm an aspiring writer from England. I've been into gaming since I was about 4 years old, playing the Game Boy, PSOne and Sega Mega Drive (Genesis to you Americans!). Having these systems around during my youth lead to the greatest and most-anticipated Christmas ever - the year I got my N64! Open to any system and genre, I remain completely unbiased as a proud owner of a Wii, Xbox 360, PS3 and 3DS. Come on Vita, give me more reasons to buy you too! My favourite games are Resident Evil 2, Zelda: The Wind Waker, Streets of Rage 2, Left 4 Dead, Final Fantasy VII, Metal Gear Solid 3: Snake Eater and Yoshi's Island. I also write news for Explosion.com. You can catch me on Twitter: https://twitter.com/ReeceH92
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