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 U.S. 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.
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.
Eric Danielson was trying to fly Monday from San Francisco to Norfolk, Va., to start a new job.
“It was supposed to be only a two-hour layover here in Atlanta, Ga., and now it’s beginning to be a 28-hour layover until tomorrow,” Danielson said.
Wall Street analysts expect carriers like JetBlue, United and Delta to suffer a short-term hit to earnings as they spend money to shuffle crews and planes away from and then back to the East Coast.