Fortune: Post-Sandy Spending Unlikely to do Much for Economy

Wednesday, 31 Oct 2012 08:49 AM

By Dan Weil

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Spending in the aftermath of super-storm Sandy will have little impact in boosting the economy, says Anne VanderMey of Fortune.

“One-off catastrophes tend to have a negligible long-term effect on the larger economy, positive or negative, even when there is a tragic human cost,” she writes.

Despite the damage wrought on some of the country’s biggest population centers, “Sandy … will hardly register on the national radar.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

To the extent Sandy does have an impact, much will be negative, VanderMey says, starting with up to $20 billion or more in losses.

Companies will surrender billions of dollars in revenue. Consider Starbucks, which shuttered its New York City stores during the storm. "You're not going to go out and buy twice as much coffee on Wednesday," Evan Gold of weather consulting firm Planalytics tells VanderMey.

Many retailers will take a hit, though some, such as Wal-Mart, should see a burst of sales, as people stock up with needed goods after the storm.

Fortunately, in the end, the economy is unlikely to suffer great pain, many experts say.

“Sandy will undoubtedly hit economic output in the short term,” Paul Ashworth, chief U.S. economist at Capital Economics, tells NBC News.

But, “some of that output will be made up before the end of the current quarter, and when we factor in the boost to [gross domestic product] growth from the cleanup, the overall economic impact is likely to be very modest.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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