Widespread loss of electric power and subway shutdowns the associated press reports that more than 13,500 flights were canceled and in New York three major airports were shut down. Super storm Sandy the second most expensive storm in U. S. history, according to Eqecat. That ranks it right behind Hurricane Katrina. Eqecat stated that the damage from the storm would likely be far worse than it previously predicted. The storm also brought a huge economic loss by flooding the New York City Subway system. Seven tunnels beneath the East River were flooded.
Depending only on this damage, it could take a long time to restore the system, this damage caused billions of dollars in additional losses. The damage in New York felt on a global scale. Trading was suspended on the New York Stock Exchange for a second straight day, the first time that has happened since the Great Blizzard of 1888. According to Bloomberg, as a result of hurricane Sandy’s damages, exchanges and banks are losing millions of dollars in revenues every single day. According to Eqecat, Sandy caused $50 billion in economic losses, including property damage, lost business and extra living expenses.
The cost to insurance companies could run as low as $10 billion and as high as $20 billion. IHS said Sandy caused about $20 billion in property damages and between $10 billion and $30 billion in lost business. The firm pointed to two reasons that Sandy left a bigger bill than it first thought. Power outages are more widespread than in a typical Category 1 storm, Eqecat said. Sandy knocked out electricity for more homes and businesses than any other storm in history, according to the Department of Energy. Eqecat stated, the lack of subway service in New York City and blocked roadways also pushed the total cost higher.
Before the storm hit, Eqecat had estimated that total economic losses from Sandy ranged as high as $20 billion and that losses to insurance companies reached $10 billion. The damages hit $50 billion, that make Sandy the second costliest U. S. storm after Katrina in 2005. Katrina’s overall costs were $108 billion. According to Moody’s, hurricane Katrina costs $128 billion today, taking inflation into account, $100 billon in total property damage. The nine other most destructive hurricanes in U. S. history each left approximately from $9 to $40 billion in distraction.
Even after adjusting for inflation, the high end of Eqecat’s damage estimates for Sandy would be higher than those caused by previous major storms. Hurricane Andrew, which hit in 1992, cost $44 billion in today’s dollars, and the Ike storm of 2008 cost $32 billion. Max Mayfield, the hurricane center director during hurricane Katrina, said the costs to FEMA are $2 to $2. 5 for every dollar of losses covered by private insurance. The hurricane also is unlikely to have much of an effect on the federal budget deficit. According to Moody’s analytics, Government aid after Hurricane Irene totaled $1. billion. The deficit, in contrast, is $1. 1 trillion. Gregory Daco, senior principal economist at IHS Global Insight, said: “Political argument over the cost of government aid is unlikely, considering that many politicians have dialed back their campaigns in the storm’s wake. ” Also, economists say that since insurance and government aid will cover much of the rebuilding, the national economy is unlikely to take a hit in the medium-term. Government aid and insurance typically have amounted to more than half of the economic costs of major disasters, according to Moody’s analytics.
Gregory Daco said he estimates that the hurricane will slightly hurt employment and will take a 0. 5 percent cut out of GDP in the last three months of the year. In terms of property damage, Sandy’s long-term impact on the national economy turned out to a small boost to growth, in terms of rebuilding after the storm. Fixing flooded highways and repairing homes will generate spending and jobs. Paul Ashworth, chief U. S. economist at Capital Economics, said that the hurricane’s net impact could even boost GDP because of rebuilding efforts.
Most of Hurricane Sandy’s economic impact will come from property damage, not lost work. According to Ashworth, insurance companies can handle the losses since they are “well reserved and well prepared,” and their payouts still are likely to be below expectations for the year. Also, he noted that property repairs and infrastructure clean up will help make up for any economic losses, since people will be getting paid to do the repairs. Ashworth added that many workers stuck at home are still getting paid and may be working remotely, and that workers are likely to get back to work in the next few days.
“Catastrophe Risk Models, Software & Consulting. ” Catastrophe Risk Models, Software and Consulting. N. p. , n. d. Web. 23 Nov. 2012. ;http://www. eqecat. com/;. “IHS Home Page. ” IHS Home Page. N. p. , n. d. Web. 23 Nov. 2012. ;http://www. ihs. com/;. “Moody’s – Credit Ratings, Research, Tools and Analysis for the Global Capital Markets. ” Moody’s – Credit Ratings, Research, Tools and Analysis for the Global Capital Markets. N. p. , n. d. Web. 23 Nov. 2012. <http://www. moodys. com/>.