â¿¿ Power outages and disruptions in major East Coast cities "may take a toll on demand unlike anything we have seen before," Phil Flynn, a senior market analyst for Price Futures Group, wrote in a report. Some of the biggest oil refineries in the Northeast were closed, and others were running at reduced capacity. As businesses closed and drivers staying home, demand for gasoline was expected to fall.
â¿¿ The cost to insurers is expected to rival the insured damage from Hurricane Irene last year. Damage from Irene cost insurers roughly $5 billion, according to Sterne, Agee & Leach Research. Because the storm is hitting a highly populous region, with "one of the highest concentrations of wealth in the world," the damages are likely to run into the billions, say analysts at Morgan Stanley.
Hurricanes, like other disasters, can cause big losses but also big spikes in economic activity, once homes and buildings are rebuilt or repaired. And Americans may spend more before the storm when they stock up on extra food, water and batteries. Spending can also rise afterward as households restock.
The overall economy expanded at an annual rate of 2 percent in the July-September quarter. Zandi said he isn't changing his forecast for similar growth in the current October-December quarter of 1.9 percent.Economic activity in October and November might slow if factory output declines and some workers are laid off temporarily and seek unemployment benefits. But the economy could strengthen in December as companies rebound. CoreLogic, a private data provider, estimates that there are 284,000 homes worth about $88 billion in the hurricane's path. The airline cancellations have already surpassed those from Hurricane Irene last August and are on par with those from a major snowstorm that socked the East Coast early last year. The Airports International Council, a trade group for airports worldwide, said that even if storm damage is minor, it could be a week before operations are normal at major East Coast airports.