Thu, Nov 01, 2012 - Page 15 News List

Superstorm to cost US billions in damage: IHS

BETTER OR WORSE?In spite of the damage caused by Sandy, experts say the US economy will not be dented in the long run and may benefit from post-storm rebuilding

AP, WASHINGTON

However, Ashworth said any losses this quarter should be made up later as rebuilding boosts sales at building supply stores and other companies.

In the short run, TD Bank deputy chief economist Beata Caranci said the economic damage could be worst for small businesses that lack the money and other resources to withstand lost sales.

However, she added that the storm should help the construction industry, which shed millions of workers after the housing bust. Many who lost construction jobs were skilled employees with disproportionately high pay and the loss of those jobs hit the US economy hard.

Major retailers on Tuesday began trying to ramp up their operations before the critical holiday shopping period.

Retailers collect up to 40 percent of their annual revenue during this month and next month. Retailers, excluding restaurants, could lose at least US$25 billion in sales this week, Burt Flickinger III of retail consultancy Strategic Resource Group said. Because of the storm, he has reduced his forecast for holiday sales to a 2.1 percent increase compared with last year from the 3.2 percent increase he had predicted earlier.

Insured losses from the superstorm will likely total between US$5 billion and US$10 billion, forecasting firm Eqecat said. Insurance losses are typically a fraction of the overall cost.

Chubb, Allstate and Travelers are the insurers most likely to suffer losses, Morgan Stanley analyst Greg Locraft said. Those companies claim a major share of the affected areas.

Yet, “as an insurance event, Sandy is going to be a blip on the balance sheet,” said Duncan Ellis, US property practice leader at Marsh, the insurance broker. “2012 has been a relatively catastrophe-free year.”

Economists expect actual property damages from Hurricane Sandy to exceed those caused last year by Hurricane Irene, which cost US$15.8 billion. Irene had little effect on the nation’s growth.

Sandy will likely be among the 10 costliest hurricanes in US history. It would still be far below the worst — Hurricane Katrina, which cost US$108 billion in 2005.

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