Hurricane Sandy’s economic toll is poised to exceed $20 billion after the biggest Atlantic storm slammed into the Eastern U.S., damaging homes and offices and flooding subways in America’s most populated city.
The total would include insured losses of about $7 billion to $8 billion, said Charles Watson, research and development director at Kinetic Analysis Corp., a hazard-research company in Silver Spring, Maryland. Much of the remaining tab will be picked up by cities and states to repair infrastructure, such as New York City’s subways and tunnels, he said.
“It is really hard to tell at this stage since the system is still moving, but it will be among the 10 to 15 most damaging storms and probably the top three in the Northeast after Irene and Agnes from 1972,” Bill Keogh, president of Eqecat Inc., an Oakland, California-based provider of catastrophic risk models, said in an interview on Bloomberg Television.
Sandy, spanning 900 miles, slammed into southern New Jersey at about 8 p.m. local time and brought a record storm surge of 13.88 feet (4.2 meters) into Manhattan’s Battery Park. Flooding, high winds and fallen trees cut power to about 8 million customers from South Carolina to Maine, and travelers were stranded as U.S. airlines grounded more than 16,000 flights. U.S. stock trading is closed again today in the first back-to-back shutdown for weather since 1888.
New York City committed $29.2 million to emergency contractors and the costs related to Sandy will probably reach “the tens of millions of dollars,” City Comptroller John Liu said. The city “will easily be able to absorb the actual cost of the clean out” and state or federal agencies will help cover the expenses, he said.
“Nobody expected a storm of this magnitude to hit New York City,” Liu said today in an interview with Bloomberg Television. “We will keep people safe, and we will start helping people dig out from this storm.”
Record tides from the storm combined with hours of pounding wind and rain to flood seven subway tunnels under the East River and electrical substations and shut down New York’s financial district. Power was lost in Manhattan south of 35th Street. Some outages were deliberate as Consolidated Edison Inc., the city’s utility, proactively shut off parts of downtown Manhattan, including Wall Street, and Brooklyn.
In the borough of Queens, a fire in Breezy Point destroyed 111 homes and damaged 20 more, according to Fire Commissioner Sal Cassano. On 57th Street in Manhattan, a crane on a 90-story residential building under construction partially collapsed and was dangling over the street.
Heavy losses to public infrastructure would in some ways mirror the effects of Hurricane Katrina, which flooded New Orleans in 2005, said Watson, of Kinetic Analysis. Katrina was the nation’s most costly natural disaster with an estimated $41.1 billion in insured property losses, according to the Insurance Information Institute.
“It kind of reminds me of Katrina, the actual wind damage from Katrina and coastal storm surge damage was easy to pull down,” Watson said. “But once you start getting water going over your protective measures and getting into your infrastructure the numbers start to go crazy.”
Eqecat’s Keogh reiterated today his estimate that Sandy would cause as much as $20 billion of economic damage with about $5 billion to $10 billion of that in insured losses. It may take six months to a year to nail down precise costs, he said.
The superstorm may have caused insured losses of as much as $15 billion in the U.S., according to modeling firm AIR Worldwide.
Hurricane Irene came ashore in North Carolina in August 2011 and raked the East Coast to New England. It caused an estimated $4.3 billion in insured losses, according to the Insurance Information Institute, based in New York.
With Sandy set to continue as a non-tropical storm throughout New England over the next several days, economists and analysts have varying estimates on the potential damage.
The storm may cut economic output by $25 billion in the fourth quarter, according to Gregory Daco, a U.S. economist at IHS Global Insight in Lexington, Massachusetts. He said that could reduce the annual pace of growth to between 1 percent and 1.5 percent from his earlier estimate of 1.6 percent.
Sandy ultimately may subtract 0.1 to 0.2 percentage points from U.S. gross domestic product in the fourth quarter as spending drops on services such as restaurant meals, according to Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. The economy, with annualized GDP of $13.6 trillion, expanded at a 2 percent pace in the third quarter.
New York’s main airports may stay closed until Nov. 1 after flooding inundated the runways, extending the travel disruptions centered on the busiest U.S. aviation market.
“Substantial” flooding occurred at New York’s Kennedy and LaGuardia airports and New Jersey’s Newark Liberty, Andrea Huguely, a spokeswoman for AMR Corp.’s American Airlines, said today.
Boeing Co., the world’s largest aerospace and defense company, said work will resume at 11 p.m. local time at its plant near Philadelphia, where about 6,000 employees build H-47 Chinook helicopters and V-22 Ospreys.
The company hasn’t yet decided when to re-open sites in Virginia, Maryland and New Jersey where about 4,000 work at the various headquarters for cyber-security, government-operations and the Network & Space Systems divisions. There was no notable damage from the storm, which forced the company to suspend operations in the region yesterday, Damien Mills and Jenna McMullin, spokespeople for Chicago-based Boeing, said by e-mail.
Tropicana Entertainment Inc.’s casino in Atlantic City suffered “very minor damage,” which appears to be the case with other gambling properties, Tropicana Chief Executive Officer Anthony Rodio said in an interview with Bloomberg Television today. He based his assessment on conversations with other casino executives.
It’s possible the city’s casinos may open as soon as Nov. 1 if state of emergency and evacuation orders are lifted, Rodio said. Operators need a notice of about 24 hours to get staff in place, he said.
Rodio declined to estimate the financial impact of the storm, saying he thinks investors will view storm-related closings as a “one-time occurrence.”
Home Depot Inc. and Lowe’s Cos., the largest U.S. home improvement retailers, said today they reopened most of the stores they had closed as Sandy approached. They reported glass broken by wind, leaky roofs and other water damage.
“We are starting to see some customers come into the stores,” Aaron Flowe, president of Home Depot’s northern division, said today by telephone from company headquarters in Atlanta. “The storm is still occurring. There is still a lot of rain and even wind. Slowly as the storm moves to the north, we’ll get more and more customers out.”