Sandy Among Worst-Ever Economic Disasters: Zandi
Superstorm Sandy will ultimately be known as one of the costliest economic disasters ever experienced in the U.S. An estimated $50 billion will be lost as a result of the storm, says Mark Zandi, chief economist at Moody's Analytics .
Only Katrina, 9/11 and Hurricane Andrew suffered bigger economic losses, he says.
In a teleconference and webcast this morning, Zandi estimated that Sandy will cost $30 billion in damages to households, businesses and infrastructure and $20 billion in lost output from business, transportation, health care, government and other services.
He cautioned that these figures are "very preliminary estimates" and total losses ultimately could be higher.
The storm affected a land mass running from Washington, DC through Maine, killing more than 50 people, wiping out homes and boardwalks along the Jersey Shore. It flooded homes and roads throughout the region as well as subways and tunnels crossing under the Hudson and the East Rivers in New York City.
Mass transit ground to a halt, the New York Stock Exchange was closed for two days—the first 2-day weather related closing in 124 years—and schools and businesses closed for days and many remain shut.
Not surprisingly Zandi says financial services will suffer the biggest losses among industries as a result of Sandy—an estimated $7 billion in lost output—followed by $4.6 billion in losses in professional and business services and $2.6 billion in losses in government.
And New York City, home to many of those financial services, will take the biggest geographic hit--almost 60% of the $20 billion in lost output—followed by New Jersey, where the legendary boardwalk of Atlantic City was largely destroyed.
Zandi says despite the damage to the region, which produces about 13% of the nation's GDP, the impact on the national economy will be "very small." He estimates the storm could shave about 0.1% from fourth quarter GDP but reconstruction could add 0.1 to 0.2% for first quarter GDSP next year.
"I assume all the property damage will be repaired" as a result of government aid and insurance payments, Zandi said.
The longer term outlook is more uncertain. Zandi says New York has more property exposed to coastal flooding than New Orleans—$320 billion worth versus $234 billion—and is unprepared for more than one big storm every hundred years.
Amsterdam, in contrast, is prepared for the worst storm in 10,000 years—which would be a lot worse than the worst storm in 100 years—and London, Shanghai and Tokyo are prepared for the worst storm in 1,000 years, says Zandi.
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