Superstorm Sandy could pack an economic punch
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The physical impact of Superstorm Sandy will be on the East Coast, but the economic impact of the storm will be far broader. Some of it is already spilling over into politics. The latest unemployment rate is due out Friday. It’s much anticipated because it’s the last such report before the election. The Labor Department Monday didn’t exactly guarantee the report would be ready on time, but it said staffers were working hard to get it out on schedule.
Whatever happens with the release of job numbers, Sandy will impact the labor market. Cleanup and construction crews will be hiring after the storm. But Challenger, Gray & Christmas CEO John Challenger doesn’t expect an employment surge.
“Even if you see $50-$100 billion of renewed economic activity after the storm is done, it’s still too small a number to make real impact on driving unemployment down long term,” he says.
The superstorm, which was downgraded from a hurricane late Monday, is especially tough on part-time workers, many of whom can’t get back hours lost because of the severe weather.
As far as housing, the impact will be different from hurricanes that strike, for example, Florida, with its troubled real estate market. Areas getting hit this time have relatively healthy property markets, with low vacancies. That could send rents soaring in affected areas.
“The loss of housing may aggravate an already tight housing market,” says Jed Kolko, chief economist at Trulia. “This could particularly hurt renters, who will need to find a new place to live and may have very few options.”
Kolko adds that new home building may slow down, because construction resources are diverted to repairs.
It’s unlikely the storm will make a real dent in the GDP. But the lion’s share of America’s economy is consumer spending, so Johns Hopkins business professor Roger Staiger says there will be some pain.
“When the weather gets horrendous, people stop consuming,” he explains. “So what you have is a day or several days of non-consumption, which is a negative drag on the economy.”
In other words, a brief surge in canned good and battery buying is unlikely to make up for all the other shopping people aren’t doing.
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