Hurricane Irene not as Damaging as Feared
Irene damage less than feared
Fragile U.S. economy may get boost from rebuilding effort
Daniel Wagner and Christopher S. Rugaber
August 29, 2011
WASHINGTON — Damage from Irene appears to be less than feared, a bit of reassuring news for a fragile economy.
Insured damage from Irene will range between $2 billion and $3 billion, and the total losses probably will be about $7 billion, according to preliminary estimates by Kinetic Analysis Corp., a consulting firm. Both figures are less than had been expected and probably mean little damage to the nation’s $14 trillion economy.
“Irene left several places with black eyes, but it doesn’t seem to have delivered an economic knockout,” said Ryan Sweet, an economist at Moody’s Analytics.
The estimates from Kinetic Analysis, based in Silver Spring, Md., suggest that Irene will have caused far less insured damage than the $6 billion the industry paid out after Hurricane Isabel struck the East Coast in 2003.
Long-term costs will grow
The long-term costs of Irene will grow as storm-ravaged areas deal with lost business, insurance claims, dislocated workers and transportation disruptions — costs that will take months to fully calculate.
Still, rebuilding and repairing the damage from the storm should be enough to boost economic output in the final three months of this year and perhaps beyond, economists say.
“This region is very highly insured, so a lot of money will start pouring in, and that should re-employ a lot of construction workers who are now out of work,” said Mark Zandi, chief economist at Moody’s.
Zandi said he thinks the benefits from rebuilding could extend into next year’s January-March quarter.
“Billions will be spent on rebuilding and recovery,” noted David Kotok, chairman of Cumberland Advisors. “That will put some people back to work, at least temporarily.”
Shipping disrupted
For now, power outages and flooding will close some businesses, costing workers lost pay and probably boosting temporary layoffs. Transportation and shipping also may be disrupted.
Chuck Watson, Kinetic’s director of research and development, noted that the impact on businesses was limited, in part, because the storm hit on a weekend. Even so, Watson and Sweet said small businesses on the North Carolina coast probably will lose two weekends of tourist activity, including the travel-heavy Labor Day weekend.
Millions of people have lost power from the storm, and analysts said the length of the outages and the extent of disruption to public transportation in cities such as New York will help determine the economic damage.
The New York Stock Exchange and NASDAQ are preparing to open today. Mayor Michael Bloomberg lifted an evacuation order for lower Manhattan as of 2 p.m. Sunday.
Airlines planned to resume some flights into and out of East Coast airports today.
Crews are already restoring power in Southern states hit by the storm and are starting work in the Northeast.
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