Sandy Could Wash Out 0.6 Percent Of Q4 GDP - Business Insider

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Sandy Could Wash Out 0.6 Percent Of Q4 GDP - Business Insider Oct 31st 2012, 18:36 Rob Wile for Business Insider Research and consulting firm IHS says Hurricane Sandy could leave a 0.6 hole in annualized Q4 GDP growth (via James Hamilton and WSJ's Josh Mitchell and Sudeep Reddy). From the report's authors, Gregory Daco and Nigel Gault: The effect on growth for the fourth quarter will not be catastrophic but might still be noticeable, especially in an economy with little momentum anyway. Suppose that the affected regions lose just 25% of their overall output for two days that is not recoverable later. That would knock about $25 billion annualized ($6 billion actual) off GDP, and could take as much as 0.6 percentage points off annualized fourth-quarter real GDP growth rate. Daco and Gault also warn gas prices will go up as a result of refinery outages: ...Sandy has forced the idling of about 70% of the East Coast's oil refineries. This does not bode well for the supply of refined oil products as capacity was already quite tight prior to the shutdowns. We are likely to see an accumulation of crude supply and a shortage of refined products in the coming days which will inevitably put upward pressure on gasoline prices. They do not mention what the effect will be on employment, but add that lost income from commercial activity at a standstill could outweigh infrastructure damages. They do say the storm will be nowhere near as damaging as Hurricane Katrina, which blew out nearly 1 percent of all GDP for 2005. SEE ALSO: The 20 Cities Most Exposed To Rising Sea Levels > Source: http://www.businessinsider.com/sandy-could-wash-out-06-percent-of-q4-gdp-2012-10

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