Could Hurricane Sandy actually help the economy?

The superstorm ravaged the Eastern Seaboard and threw sand in the economy's gears. But the stimulative effect of reconstruction could result in a net gain

A firefighter looks through debris
(Image credit: Spencer Platt/Getty Images)

At first glance, the economic havoc wrought by Superstorm Sandy seems exceedingly grim. The storm battered the most densely populated area of the U.S., which accounts for a quarter of the nation's GDP. Initial estimates suggest that Sandy caused about $20 billion in damages, and that figure could even rise to $50 billion, topping Hurricane Katrina in 2005. The storm tore up infrastructure, shut down transportation, caused widespread power outages, and snarled telecommunications networks. Each day that the economy remains in limbo costs an estimated $10 billion in output, and economists already predict that Sandy will have noticeable impact on GDP for the fourth quarter, say Chris Burritt and Brian K. Sullivan at Bloomberg:

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.

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