Hurricane Irene is responsible for at least 22 deaths, but its downgrade to a tropical storm from Category 1 status Saturday night decreased its damaging wind speeds and accompanying storm surge -- something that undoubtedly reduced the level of damage and destruction in New York City, New Jersey, and Connecticut -- and also probably saved lives.

Hurricane Irene will likely cost insurers $1.5 billion to $3 billion to cover claims for damaged homes, vehicles and businesses, said Jose Miranda, director of client advocacy at Eqecat Inc., a catastrophic risk management firm in Oakland, Calif. Total damage, including uninsured losses, could range from $5 billion to $7 billion, he said, reported Monday.

The U.S. government estimated that the cost from wind damage alone will exceed $1 billion, reported Monday.

In comparison, the 1994 Northridge, Calif. earthquake cost insurers $40 billion to $50 billion in property damage, and Hurricane Katrina in 2005 cost about $70 billion in insured losses alone.

What's more, an estimated four million customers are without power across the Northeast alone, and dollar damage estimates on restoring the electric grid are not available at this time.

New York, Nasdaq Stock Exchanges to Open

Irene shut down Manhattan and substantially reduced commercial activity over the weekend -- including canceling thousands of flights -- but the storm's economic damage will likely be far less than originally predicted. In particular, New Yorkers, for the most part, feel like they were spared.

However, even though New York's mass transit system remained a patchwork at best Monday morning, signs of a return to something resembling normalcy were abundant.

New York City Mayor Michael R. Bloomberg lifted the city's evacuation order, and the New York Stock Exchange and Nasdaq OMX Group issued statements saying they planned to be open Monday. The last time U.S. stock markets closed for an entire day was Sept. 27, 1985, after Hurricane Gloria.

In Washington, The U.S. Federal Emergency Management Agency announced on Sunday that it has begun its damage review of states affected by the hurricane.

We are starting assessments in North Carolina, FEMA administrator Craig Fugate told The Associated Press.

Many of the actions governors must take to mitigate the impact of the storm can be expensive, though he said an emergency declaration helps offset the costs with 75 percent funding from the federal government.

Fugate added that there are no dollar figures at this point, and that it would take the federal government several days to begin creating estimates.

The recession hit states' budgets hard, leaving them with fewer funds to respond to emergencies and in fiscal 2010, the latest year for which data is available, the median budget for crisis response fell to $3.3 million from $3.41 million the year before, according to the National Emergency Management Association.

Public Policy/Economic Analysis: To be sure, Hurricane Irene in the short term will hurt the U.S. economy. Long-term, however, if past natural disaster rebuilding efforts are any indicator, it will boost GDP, as rebuilding typically leads to an increase in construction employment in zones affected, as well an increase in orders and sales of building materials.

Further, in light of the storm's less severe path -- the hurricane made landfall in New Jersey, decreasing its strength substantially -- the entire Northeast U.S., and in particular New York City, has to feel like it has been spared: a Category 1 or 2 hurricane could have inflicted catastrophic damage on New York and surrounding areas.