The aftermath of super storm Sandy is costing New York City up to $200 million a day in permanently lost economic activity, including everything from the sale of pizza slices to corporate mergers and other Wall Street deals, the city’s comptroller said on Wednesday.
New York City generates up to $2 billion a day from various economic activities on average. But the Big Apple could lose 10 percent or more of that forever, Comptroller John Liu said in a Reuters interview.
Sandy made landfall on the New Jersey coast on Monday, leaving massive flooding, power outages, crippled transportation systems and 64 people dead in its wake.
The storm’s long-term impact on the world financial capital is still unclear, but the city should eventually recover much of that.
“Over the last couple days, economic activity is down to about 20 percent of usual. It’s a huge drop. And it’s probably not going to get back to 100 percent for some time,” Liu said.
“Based on past history, most of that economic activity is not completely lost, it’s just postponed. We don’t believe the permanently lost economic activity will exceed $1 billion.”
FEDERAL AID, INSURANCE MONEY
But there are other costs.
The city that never sleeps is also losing “several million” dollars a day in tax revenue, Liu said. New York City has also paid $29.2 million in emergency preparations to cover heavy equipment, manpower, transportation, ambulettes, ready to eat meals, oxygen tanks, construction equipment, structural engineers and more. By comparison, the city spent $12 million on these emergency contracts for Hurricane Irene in 2011, Liu added.
Sandy may have caused $10 billion to $20 billion in total economic damage, with $5 billion to $10 billion in insured losses. Between 30 percent and 40 percent of those costs are in New York City, according to EQECAT, a catastrophic risk consultant to insurers.
The Federal Emergency Management Agency could reimburse the city for up to 75 percent of losses. New York Governor Andrew Cuomo asked the federal government on Wednesday to reimburse up to 100 percent of state and local government clean up costs.
Money from FEMA, the billions of possible dollars from private insurance companies and the construction and repair work they pay for could be an “economic shot in the arm” for the city, but one that is still several months to a year away, Liu said.
The city normally borrows $12 billion to $15 billion a year to pay for capital costs and refinancing old debt. It could use some of that money to pay for infrastructure repair after Sandy, but Liu does not expect “a huge amount of borrowing on the part of the city to recover damaged assets.”
Other agencies, such as the Port Authority of New York and New Jersey, separately issue billions in debt each year and also have major stakes in New York City area infrastructure.
Liu does not anticipate that the storm will impair the city’s ability to borrow money at low rates.
(Reporting By Hilary Russ. Editing by Andre Grenon)
Topics New York
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