The Economic Cost of Sandy
Board: Macro Economics
Already was a good analysis from a fellow Fool that the initial this early morning impression, best case scenario is a 1% hit to 4Q2012 GDP growth. That figure will only get worse as things get added up. Major impacts to GDP looking through the mountain of reports:
1) Unknown number of structures that are going to be uninhabitable. Remember, a lot of these properties were not covered under flood insurance. It's going to be out of pocket and guaranteed government loans for rebuilding. There are homes destroyed from Massachusetts to Ohio to North Carolina. Need to see how many.
2) No NYC subway for 5 days - minimum - before full operation. That means not only can workers not get into Manhattan, but the essential workers, the ones needed for clean up, will have the hardest time with no transit solution.
3) No power from 39th down to the Battery, minimum 5 days. This includes many global business centers. Despite the insistence from fellow Fools that the lights were out because Con-Ed turned them off, we now know the story - as I posted yesterday. A major transformer farm succumb to the storm surge and has been destroyed.
4) The Atlantic City Boardwalk is destroyed. We're talking hand of God, nothing left but shattered buildings, foundations and pilings destroyed.
5) Eight million CUSTOMERS in the dark, some will be without power for weeks. A CUSTOMER is different than a person. A customer in New York city could be a wealthy person in a stand alone home or a 50 story apartment building. The number of PEOPLE in the dark is much, much bigger. This includes businesses that can't operate.
6) Fleets of NYC taxis and buses are underwater. This will have a serious impact on transportation infrastructure lowering the number of available vehicles. The flooded fleets should be covered by insurance claims.
I'll keep adding to this thread over the next few days. I think GDP loss in the 4th quarter could go as high as 3%, and 4Q2012 will show negative growth.
Now, for the Foolish investor. Where are the wins? Home Depot and Lowes are going to be no brainers. Both stores do well after major disasters, they are both good at logistics and JIT of critical inventory, and more so for Home Depot, on the rebound after the economic meltdown. Full disclosure - I do own HD stock.
I would look at suppliers for the power and utilities industries - they are going to be moving materials and services.
Nissan should be a winner given any Ford Panther body cab sitting under water is likely to be replaced by a new Nissan. After an initial shock in car sales, those who have cars flooded will need to replace (once the ECM gets wet, a modern car is dead) so I would see a lift for the auto makers.
Longer term I think cloud service providers could be winner, as companies that need to replace infrastructure will look more to the cloud, both from a cost savings and security stand point.