As the dust starts to settle on the massive destruction left by Hurricane Sandy, along with the tragic human cost, rational thought process has many of us pondering the macro effect. We really won’t know the exact impact on the United States economy until well into 2013 and, even now, the general consensus by and large is mixed at best with strong opinions on both sides of the spectrum.
With such unique events, the true question is how the full extent of the disruptions can be quantified while reviewing the various types of damage and duration of disruptions to various activities that result in economic impact. For starters, one would have to consider the cost impact to insurance companies as the rebuilding process takes place and this will be costly -- very costly.
Be that as it may, while never good for the re-insurers, the market tends to glance over such "capital losses," writing them off over time as tragic happenstance. Where we could see an impact could be in terms of Industrial Production. Industrial Production was already weak in Q3 and, in the wake of the hurricane, one would have to expect an even weaker Q4. Also, retail sales numbers could slide given a considerable block of consumers will be more concerned with the needful -- electricity, food, shelter, and, when possible, a commute back and forth to work.
With that said, I would like to send my best thoughts and wishes to everyone that has been impacted by this storm. The most important thing to know is the eastern half of the U.S. will rebuild, and help is on the way.
Disruptions to travel and power could be a considerable wildcard and it would be prudent to keep an eye on just how long it takes for services to be restored and infrastructure to be repaired. At this stage, trying to assimilate credible projections is pointless. As time goes by, however, and we have more information to peruse and rightly project the economic impact of yet another tragic natural disaster on American soil -- the perfect picture can only be taken with the passage of time.