Sandy Aftermath: Calculating Economic Damage a Tricky Proposition

State troopers have been deployed at all gas stations along the NJ Turnpike and Garden State Parkway, where dwindling gasoline supplies are causing frayed nerves as the region endures its third full day with massive power outages.

Frustration with gas supplies topped the list of issues causing tensions to boil over in New Jersey, New York and Connecticut, the states hardest hit by power outages in the wake of superstorm Sandy. Residents jockeyed for fuel at the few stations still pumping, searched store shelves in vain for batteries, struggled with sporadic cell phone service and found themselves unable to buy necessities at supermarkets.

The folks at Strategas Research Partners estimate Sandy affected about 1/4 of the total U.S. economy for several days, which could depress economic growth by several tenths of a percentage point.

That’s a material amount, especially considering third-quarter growth came in at 2.0% and economists were expecting comparable growth for the current period prior to the storm.

Strategas notes the fact that the storm hit in the first month of the fourth quarter leaves time for rebuilding efforts to offset some of the lost business. That should help limit the impact on GDP.
Still, analysts are all over the map when estimating how growth for the rest of the year will play.  Economists at Jefferies calculate that the total drag from Sandy will be around 0.4%-0.5% of fourth-quarter GDP.
But High Frequency Economics  says the economy will suffer “limited fallout” when all is said and done.

Sandy Aftermath: Calculating Economic Damage a Tricky Proposition