How Will Hurricane Sandy Impact The Economy?

Over the last week, I've heard a number of media types declare that there's a silver lining to hurricane Sandy; and, that is jobs.  Jobs to repair and jobs to rebuild.  But, this declaration simply ignores how many jobs will have been killed by this storm.

If you look at the Jersey shorelines, the boardwalks have been obliterated.  These "walks" were accesses to dozens of businesses with hundreds of workers.  Now, those buildings will be idled for months; maybe even years for some.  Other businesses, more inland, suffered severe flooding and may not be able to reopen until the water damage is corrected and inventories replaced.  All told, more jobs will probably be lost to the hurricane than will be created.  Then, too, any jobs that are created won't be lasting.  Once the construction work is over; the workers will go back to being unemployed.

The fact is that Sandy is "currently" estimated to have done about $20 billion in damage; and, certainly, some portion of that amount of money will be used to create jobs.  But, on the other hand, it is estimated that the economy will lose as much as $30 billion in business activity.  That, simplistically, could mean that for every 2 jobs created, 3 may be lost. 

In terms of the overall impact, the above cost totaling $50 billion isn't much when you consider that we have a $15 trillion economy.  In fact, the total impact of this disaster is less than 3-tenths of one percent. But, in an economy that is already weakening, the additive effect of this storm might be more much more significant than what the numbers are telling us.