Hurricane Sandy May Shave 6/10% From GDP, Cost Estimates Rise to $50 Billion

Following up on our Monday post "That Which is Seen and That Which is Not Seen: Bastiat on Hurricane Sandy".
From the Wall Street Journal:

 

Natalie Keyssar for The Wall Street Journal

A statue of Mother Mary stood among hurricane wreckage in Queens, New York, Tuesday.

Sandy is delivering a blow to the U.S. economy that will reverberate for weeks, disrupting commerce in the nation's most-populous region, destroying billions of dollars' worth of property and likely boosting gasoline prices.

Along the East Coast, some restaurants, car dealers and other retailers are likely to see sales slip. Many workers aren't being paid for lost hours. Shipments of goods through eastern seaports and airports are being delayed.

That would drain billions of dollars from the economy at a time when it already is growing sluggishly. Much of this economic activity will be delayed or shifted, such as when the money not spent in a coffee shop this week is spent on a movie next week.And other commerce will pick up as utility workers earn overtime pay, construction crews start rebuilding and homeowners buy materials to repair damage. Many grocers and home-improvement stores rang up higher sales as people prepared for the storm.

Still, the short-term damage likely will cause the economy to grow more slowly in the final three months of the year than it did over the summer, when the economy grew at a tepid 2% annual pace, forecasters said.

Consultancy IHS Global Insight estimated Tuesday that the storm could shave 0.6 percentage point off the annualized pace of growth in the nation's gross domestic product in the fourth quarter. This doesn't capture the complete impact because GDP measures the value of the economy's output of goods and services, but not the wealth destroyed....MORE

U.S. News and World Report has a smaller number for the national GDP hit:

...IHS estimates that the costs associated with Sandy could total somewhere between 1 percent and 1.7 percent of gross regional product for the dozen or so states affected, which would translate to about 0.3 percent of national GDP. That might not sound like much, but it comes at a time when the overall economy is growing at a scant 2 percent, a growth rate that could slow even further as Washington grapples with the "fiscal cliff" approaching at the end of the year....

Finally, Caroline Baum writes at Bloomberg:

No, Hurricane Sandy Won’t Help the Economy

Before the nonsense gets too far out of hand, let's review very briefly why natural disasters aren't a net plus for an economy.

Don't laugh. Every time some region of the world suffers the ravages of nature, economists pump out silly reports outlining the benefits. They all read pretty much the same...MORE

She is more charitable than I was after Irene last year:

...Of course, Strobl and others could publish 50 papers with similar conclusions and it wouldn't stop some doofus from proclaiming that the aftermath of some hurricane or other disaster will be greater prosperity.

-Paging M. Bastiat: "So Much for Hurricanes as Stimulus, Part Deux"