Sandy's costly impact
Airlines cancelled thousands of flights and stranded travellers. Insurers braced for damage of up to US$5 billion. Retailers expected shrunken sales.
Hurricane Sandy is causing disruptions for US companies, travellers 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.
Preliminary estimates are that damage will range between US$10 billion and US$20 billion. That could top last year's Hurricane Irene, which cost $15.8 billion.
If so, Hurricane Sandy would be among the ten 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 yesterday.
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.
Here's how the storm has begun to affect areas of the economy:
• Air travel in the Northeast is all but stopped for at least two days. Airlines cancelled more than 10,000 flights for yesterday and today from Washington to Boston. The disruptions spread across the nation and overseas, stranding passengers from Hong Kong to Europe. Carriers could suffer a short-term hit to earnings as they spend more to shuffle crews and planes.
• The nation's major retailers are expected to lose billions of dollars, and the losses could extend into the crucial holiday shopping season. Sales at department stores, clothing chains, jewellers and other sellers of non-essential goods are expected to suffer the most.
• Power outages and disruptions in major East Coast cities "may take a toll on demand unlike anything we have seen before", Phil Flynn, a senior market analyst for Price Futures Group, wrote in a report. Some of the biggest oil refineries in the Northeast were closed, and others were running at reduced capacity. As businesses closed and drivers staying home, demand for gasoline was expected to fall. See Page 23.