Superstorm Sandy’s negative impact on the U.S. economy could be as much as 0.6 percentage points to Real GDP in the fourth quarter, according to Greg Daco, senior principal U.S. economist for IHS Global Insight. Daco spoke on a panel of economists assembled by the National Association for Business Economics on the economic implications of the storm, which ravaged much of the Northeast.
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Daco estimated total economic losses of $30 billion-$50 billion in the area coming from total infrastructure losses and disruption to business activity.
One of the hardest-hit industries has been oil refining. About 70 percent of refining capacity in the Northeast was idled during the storm and the days following the storm. To that end, Reuters reported Monday that oil company Hess Corp. was still unsure last week when their 70,000 barrel per day refinery in Port Reading, NJ, might come back online, and the 238,000 barrel-per-day plant owned by Phillips 66 in Bayway, NJ, will likely be shut down for another two to three weeks.
Regional production slowdowns in most industries, though, may be offset by several factors. One is that some production backlogs can be reversed as systems come back online. Charlie Steindel, chief economist for the New Jersey Department of the Treasury, seems confident that short-term losses will be much less visible in the long-term. “In the industrial economy and in manufacturing plants, the experience of the past has been storms shut down activity for a while, then extra shifts are run and things are made up,” he says.
Reconstruction and repair efforts will also offset some of the loss. Daco makes clear, though, that rebuilding takes time, especially considering the upcoming cold weather that will make repairs more difficult.