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Storm brings East Coast economy to a halt

By Agence France-Presse
Monday, October 29, 2012 15:57 EDT
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A lone tourist stands in Times Square as New Yorkers prepare for Hurricane Sandy. (AFP)
 
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Hurricane Sandy froze commerce, shut down stock exchanges for the first time since 9/11 and idled millions of workers on Monday, laying siege to an economy still trying to get out of first gear.

With the US east coast from North Carolina to Massachusetts threatened by furious winds and a potentially devastating storm surge, businesses closed, refiners shut down operations and insurers girded for a leap in damage claims.

The New York Stock Exchange and the Nasdaq market shut completely on Monday and will stay closed on Tuesday, with operations expected to resume Wednesday, “conditions permitting,” the NYSE added.

It was the first full trading closure since the September 11 attacks closed US equity markets for four days in 2001, and the first full NYSE shutdown due to weather since September 1985, when Hurricane Gloria closed it for a day.

Disaster estimator Eqecat forecast that the massive storm could cause up to $20 billion in damages, only half of them insured, as it strikes land around New Jersey and collides with another weather front.

Tom Larsen, the company’s senior vice president, said the category one storm could affect 20 percent of the US population.

That could hit an economy that has already been struggling to gather pace, with economic growth at 2.0 percent in the third quarter and the government struggling to overcome an unemployment rate of 7.8 percent.

The storm also comes as President Barack Obama battles a strong challenge from Republican Mitt Romney, with the November 6 election offering voters a choice between the very different economic plans mapped out by the two.

Four major economic centers — New York, Washington, Philadelphia and Baltimore — were effectively closed, with mass transit and flights cut or halted completely, businesses shuttered and office workers forced to work from home.

Banks such as Bank of America and Goldman Sachs — located in low-lying areas of Manhattan that were ordered evacuated in the face of a flooding threat — shut their doors and transferred crucial operations to other offices.

Many companies who had expected to announce quarterly earnings put off their release, including Pfizer, McGraw-Hill and Thomson Reuters.

There were widespread warnings that power would be cut to many homes and businesses, meaning that even after the mega-storm passes on Wednesday, many people would possibly still be unable to go back to work.

Hurricane Sandy was packing maximum sustained winds of 90 miles (150 kilometers) per hour Monday as it headed for the US East Coast.

Storm surges were already causing flooding along the coast, with more flooding expected.

Worries that fuel could be in short supply because of the shutdown of several oil refineries along the coast were downplayed, mainly because consumption was also sharply lower as drivers stayed home.

“Gas availability could be affected more from the threats of flooding,” said Stephen Rajczyk of the northern New Jersey branch of the motorists’ organization AAA.

But, he added: “Prices should not be impacted by this due to less driving, businesses and schools closed, less economic activity in general.”

Some played down the broader impact of the storm on the economy, saying that construction, trading and shopping would resume with a spurt afterward.

“Wealth destruction is bad, and Hurricane Sandy could destroy billions in national wealth,” said Jason Schenker of Prestige Economics.

“Nevertheless, while hurricanes and other natural disasters are extremely negative for wealth, they are usually positive for growth.”

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
 
 
 
 
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