Economic damages inflicted by Hurricane Sandy could reach $50 billion, according to new estimates that are more than double a previous forecast. Some economists warned Thursday that the storm could shave a half percentage point off the nation’s economic growth in the current quarter.
Losses from the storm could total $30 billion to $50 billion, according to EQECAT, which tracks hurricanes and analyzes the damage they cause. On Monday, before the storm hit the East Coast, the firm estimated $10 billion to $20 billion in total economic damages.
The flooding of New York’s subways and roadway tunnels, and the extensive loss of business due to utility failures across the region were behind the sharp increase in the estimate, the firm said.
“The geographic scope of the storm was unprecedented, and the impacts on individuals and on commerce are far larger,” said Tom Larsen, EQECAT’s senior vice president and product architect. “Lost power is going to contribute to higher insurance losses.”
EQECAT predicted that New York would bear 34 percent of the total economic losses, with New Jersey suffering 30 percent, Pennsylvania 20 percent, and other states 16 percent. That includes all estimated losses, whether covered by insurance or not. To be sure, the estimates and the share that will be covered by insurers are far from certain at this point, as government officials, property owners, and insurance adjusters struggled to assess the destruction.
While the stock market, banks, and other financial institutions regained some of their stride Thursday, other sectors like retailing, transportation, and leisure and hospitality face a much longer and more difficult recovery. In fact, with fuel in short supply in many areas and utilities warning that power may not be back for a week or more in some areas, businesses found themselves preparing for the equivalent of a long siege.
FedEx, for example, was trying to rent fuel tankers for its trucks in New York and New Jersey as commercial gas stations run dry.
“We’re reaching out to everyone who has a gasoline tanker that we can move to these areas,” said Shea Leordeanu, a spokeswoman for the company. While FedEx had stocks of oil in advance of the storm for generators, it was not prepared for the gas shortages that caused long lines at stations Wednesday and Thursday.
“There has not been an impact yet, but this is something we can see as an issue, and we’re concerned,” she said.
As logistical problems mounted and damage estimates surged, economists raised their estimates of the storm’s impact.
“I think the effect will be quite big,” said Julia Lynn Coronado, chief economist for North America at BNP Paribas. “In the fourth quarter, we’re probably looking at an impact of half a percentage point.”
She said some of those losses will be made up in the first quarter of 2013, as insurance reimbursements are distributed and homeowners and businesses rebuild.