From the New York Fed's Liberty Street Economics blog:
The New York metro region’s recovery from
Superstorm Sandy is well under way. Spending on restoration and
rebuilding activities following a natural disaster is a potentially
powerful economic stimulus to the affected area. Indeed, money
from outside the region—in the form of federal aid and private insurance
payments—flowing to the damaged areas in the region gives a temporary
boost to economic activity. But does this mean that Sandy—along with the
federal aid and insurance payouts associated with it—was actually good
for the region’s economy? In this post, we examine the nature and
magnitude of the stimulus the New York metro region is receiving as it
recovers from Sandy and provide some thoughts on how the economy may be
affected over the longer term by rebuilding activities.
A Boost to Economic Activity
Clearly, Sandy caused widespread damage and depressed economic activity
in the region. No doubt, the funds the region is receiving as the
hardest-hit areas recover will provide an offsetting boost to economic
activity. The two main sources of recovery funds are the $60 billion in disaster relief appropriated by Congress and roughly $20 billion
in receipts from private insurance settlements—the majority of which
will go to New York and New Jersey. For the hardest-hit communities,
this disaster assistance is quite large compared with the size of the
local economies, and will play an essential role in the recovery. As a
share of the broader regional economy, however, this funding is more
modest, totaling about 6 percent of the New York metropolitan region’s
$1.3 trillion economy....MORE
See also:
Frequent Bridge Collapses Help Boost China’s GDP
It's probably good to remember the words of the head of the Czech
central bank:
....central bank Governor Miroslav Singer cautioned against confusing gross domestic product (GDP) growth with wealth.
"The
repair of flood damage will probably result in an acceleration of the
tempo of GDP," he predicted in a presentation last week, adding: "This
variable measures economic activity, or the creation of new value each
year; GDP does not measure wealth!"
-Czechs Going All Chinese (GDP-wise)
