Superstorm Sandy may cost States up to $50bn as stock exchange stays shut
First time bad weather has shut NY market for two consecutive days since 1888
Wednesday 31 October 2012
The devastation wrought by Superstorm Sandy could cost up to $50bn (£31bn) according to some economists and wipe 0.7 per cent off US growth in the fourth quarter.
Up to 8 million homes in the east of the US have lost power, transport links have been damaged and nearly 70 per cent of the oil refinery capacity is idle.
Gregory Daco and Nigel Gault at IHS Global Insight US Economists said: "Early estimates of potential infrastructure damages currently stand around $20bn.
"This would put Sandy on par with [Hurricane] Irene in terms of total infrastructure damage estimated around $15bn. However, with Sandy being a much larger storm, it is likely to end up causing more flooding damage than its 2011 peer, which would increase total damage estimates."
This could hit already fragile US economic growth in the immediate lead-up to the presidential election next month, according to Capital economics.
But Paul Ashworth, chief North American economist at Capital Economics, said this was not the whole story: "You have to remember that the hurricane generates extra activity too, in terms of the clean-up and rebuilding … In theory, it could even be a positive for the economy."
Mark Zandi, the chief economist at Moody's Analytics, added that the US, which is used to this sort of event, could be poised to recover fast: "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," Mr Zandi said.
The US economy grew at an annual rate of 2 per cent in the July-September quarter, according to the first estimate released last week. Moody's said that as yet the effects of Sandy were not enough for it to downgrade its fourth-quarter estimate for US growth from 1.9 per cent.
One crucial part of the US economy facing continuing disruption is the stock market. The New York stock market was closed yesterday for the second consecutive day.
This represents the longest closure since 9/11 and the first time bad weather has shut the New York market for two consecutive days since 1888. But the New York Stock Exchange and Nasdaq say they plan to reopen today. This is a key trading day, as it is the end of the month when traders price their portfolios and accounts are settled.
The decision to close markets came after regulators had reversed a plan to keep electronic trading going. The NYSE Euronext's New York stock exchange had initially planned to shut its physical trading floor, which would have meant operating as an all-electronic exchange for the first time. But some of the investment banks which would have been key to the operation were in the evacuation zone.
Justin Bieber was one of the hardest hit
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