Sandy Gets Pricy

Now that Sandy has left its mark, estimates on the cost of damages are starting to pour in. Currently, estimates of economic damages from Sandy are between $30-50 billion. According to the L.A. Times, estimates of the economic losses from the storm reached $50 billion. These numbers come from severe property damage, subway shut-downs, and power outages. This past Thursday, Eqecat Incorporation estimated storm damages between $30-50 billion. Of that estimate, $10-20 billion will be insured. As devastating as these numbers are, according to Business Insider, these numbers are considerably low to that of Hurricane Katrina; which damages came in at $145 billion. So an answer to the pressing question still remains: How is Hurricane Sandy going to impact the already damaged U.S economy?

According to a recent report released by JPMorgan, “Hurricane Sandy may initially depress economic activity, then support it over time as rebuilding commences.” The report also stated that short term impacts are going to be high, but in the long run the impacts will be minimal.

The following chart shows monthly GDP after three major hurricane events:

In general, the affects of the hurricanes were very noticeable within the first couple months of the storm, which is followed by a more stable economy about 6 months out. According to Business Insider, the biggest impacts will be on housing, construction, and retail sales. Although there will be an initial decline in these areas, it will be followed by a boost in the purchasing of building materials, construction, some home sales, etc. This is something that was discussed when talking about direct and indirect gains/losses of disaster during lecture, so it will be interesting to see what the short term and long term effects of Hurricane Sandy are as more information becomes available. Also during lecture, we discussed why the government and insurance companies pay such close attention to storms, and stories like this are proof on why that is so important. 

For more information, visit:

What Hurricane Sandy Means For The U.S. Economy

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