Storm leaves billions in damage across eastern US

Posted at 10/31/2012 7:32 AM | Updated as of 10/31/2012 10:11 PM

NEW YORK - US businesses, homeowners and local governments faced up to $20 billion in damage Tuesday as Hurricane Sandy left coastal homes crumbled, urban neighborhoods swamped and eight million without power.

Much of the economically crucial northeast Atlantic coast corridor remained shut down late Tuesday, including the global financial hub of New York City.

New York banks and two of the world's largest equity markets, the New York Stock Exchange and the Nasdaq Stock Market, were shuttered for a second day after the storm lashed New York.

Crucial transportation services, from buses to airlines, were struggling to resume service after shutdowns that had heavy economic and social impact far beyond the path of the megastorm.

Disaster estimator EQECAT said the storm could cause a total of $10 to $20 billion in damage, with insured losses accounting for about half of the amount.

But economists said that even considering the money spent for rebuilding, the losses to the total economy could hit $30-50 billion, shaving off a good chunk of economic growth in the fourth quarter.

"The commercial shutdown of the East Coast is likely to result in gross domestic product losses that may outweigh infrastructure damages," said Gregory Daco and Nigel Gault of IHS Global Insight.

The gigantic hurricane that came ashore in New Jersey late Monday turned four of the country's leading cities and economic power centers, including global banking capital New York, into ghost towns.

The normally bustling financial quarter of Manhattan, partially submerged by floodwaters from a powerful storm surge, was deserted Tuesday morning, and the headquarters of huge banks Goldman Sachs, Citigroup and New York Mellon closed, as were thousands of other businesses tied into the financial industry's web.

The stockmarkets and related derivatives and futures trading boards were all dark for a second day, their first shutdown since the 9/11 attacks closed financial markets for four days in 2011.

It was the NYSE's first weather-related closure since 1985, when Hurricane Gloria halted trade for one day.

Both the NYSE and Nasdaq announced they would resume business on Wednesday.

"We are pleased to be able to return to normal trading tomorrow," said NYSE Euronext chief executive Duncan Niederauer.

"Our building and systems were not damaged and our people have been working diligently to ensure that we have a smooth opening tomorrow."

Foreign markets were hit with sharply lower volumes due to the closures in New York.

"The real engine is still Wall Street," said stock trader Yves Marcais at Global Equities.

"When New York is closed, there is roughly 40 percent less volume in Paris."

In Europe, oil prices rose slightly as traders assessed the impact the disaster would have on demand for crude oil in the United States, where several key refineries and terminals along the Atlantic coast were shut down for the storm.

The dollar remained fairly firm, slipping about 0.4 percent against the euro during the day to about $1.2961.

"The market is rolling with the punches as little on the economic or policy side will change," said forex specialist Sebastien Galy at Societe Generale.

Experts said the losses from business closures could double the physical damages sustained in the storm.

"While many lines of insurance will be affected, including property and auto, there is the potential for significant business interruption and contingent business interruption losses related to the flooding," Fitch Ratings said.

"The massive storm is impacting a wide variety of businesses in densely populated areas, including retail, corporate offices, transportation, manufacturing and energy plants."

The IHS economists expected physical losses to top the $15 billion from Hurricane Irene last year.

"With Sandy being a much larger storm, it is likely to end up causing more flooding damage than its 2011 peer, which would increase total damage estimates," they said.

While some losses to economic production will be recovered in rebuilding spending, not all can be regained.

But even the larger estimates were still small compared to the $120 billion in economic damage wrought by Hurricane Katrina, which devastated the US Gulf of Mexico coastline in 2005.

But Daco and Gault at IHS warned that damage caused by Sandy was still enough to reduce the economic growth rate in the fourth quarter by 0.6 percentage points.

© 1994-2012 Agence France-Presse