WASHINGTON, Nov 1, 2012 (AFP) – Damage from the deadly superstorm that blasted the US East Coast and shut down New York City could hit $50 billion, economists said Thursday, but the impact on the broader economy will be minor.
The lion’s share of the damage will be felt by New York, where physical damage in low-lying lower Manhattan and the cost of two days of market blackouts and bank closures continued to mount.
The massive storm, which swept ashore in New Jersey late Monday, left at least 85 dead in the United States and forced four major cities – Washington, Baltimore, Philadelphia and New York – to completely close down for two days.
The winds and high waters destroyed homes, cut off the power for more than eight million users, and halted transportation across an area responsible for around 13 percent of the entire US economy.
Some 4.5 four million remained without power Thursday and New York’s major power company Con Edison said that some would have to wait until November 11 before electricity is restored.
Disaster estimators Eqecat said the physical damage could run between $30 billion and $50 billion, and insured losses $10-20 billion, double its model-based forecast before the storm hit.
Eqecat said it had raised its estimates because of the extensive losses from power and other utilities, which were much greater than those for hurricanes of similar intensity.
It also cited the extended shutdowns of subways and road tunnels in the New York-New Jersey area due to flooding, and expectations that the extent of losses is yet unknown.
“It’s very possible that Sandy’s insured losses could be greater and larger than anything we’ve seen since Hurricane Katrina,” said David Smith, senior vice president of Eqecat.
Standard & Poor’s said however that the insurance industry should be able to absorb the Sandy-related losses.
“The hit will be offset by strong capital bases and strong earnings through the first three quarters of 2012,” S&P said.
The storm largely froze economic activity in a region with 12.1 million households and generating some $2.1 trillion an annual output, according to Moody’s Analytics.
Moody’s said damages to homes, businesses, infrastructure and other areas could run to $30 billion.
Added to that is the cost of lost output, likely hitting $19.9 billion.
The largest output losses will come from the financial industry, heavily concentrated in the lowest-lying, most flood-vulnerable areas in lower New York City, and in the heavy-hit suburbs in New Jersey and Connecticut.
On Thursday much of the securities and banking center of Wall Street remained dark due to power and communications outages, and mass transportation still had not resumed in the area.
The Federal Communications Commission warned that it could still take some time to get communications back up.
“Restoration efforts in the hardest-hit areas – including New York and New Jersey – continues to be more difficult,” said FCC Public Safety and Homeland Security Bureau chief David Turetsky.
“Replenishing fuel supplies for generators that are enabling communications networks to continue operating is a particularly critical challenge.”
Catastrophe modeler AIR Worldwide said that although Sandy was only ranked a category one hurricane, it delivered the impact that category four storms bring.
In sheer size, Sandy was nearly twice as a large as the devastating category three Katrina of 2005, with its hurricane and tropical force winds affecting an area spanning 950 miles (1,530 kilometers).
“Sandy’s diameter made it the largest Atlantic hurricane on record in terms of the span of tropical storm-force winds,” the company said.
Likely damages from Sandy were still dwarfed by Katrina’s $157 billion cost, hitting about 0.9 percent of the nation’s gross domestic product.
The real impact of Sandy will be “very small,” Moody’s said – less than 0.2 percent of the economy.