Sandy’s Economic Effects Charles Steindel NJ Department of the Treasury January 15, 2013

Costs incurred by the storm Output Losses – Temporary Disruptions – More lasting Physical losses – Destruction of property, injuries and loss of life 2

Output Losses Appears to have been some disruption to consumer spending and manufacturing, and related loss of hourly wages. – NJ revenues in November clearly affected by storm. – Loss of employment appears to have been limited so far, but increase in unemployment insurance claims was notable. – Emergency recovery activities obviously a cost, but are treated as a positive in output measures. More permanent demand loss (leisure and hospitality, etc.) remains to be seen. – Clearly dependent on pace of recovery. 3

Physical Losses and Costs Installation cost of replacements for capital damaged or destroyed by the storm. Longer-term needs raised by the storm. – Could suggest fundamental re-engineering of structures, systems, and landscapes, and relocation of activity. – Such projects would involve a longer horizon than restoration and replacement. 4

Timing and Impact of Reconstruction Activity Florida typically anticipates a 2-year rebuild after a major storm. – Given more limited northern building season, and complexity of some of rebuilding, the cycle may be a bit longer after Sandy. – Still, rebuilding should have a noticeable impact, particularly to some industries (engineering and construction) and in some areas of the state. Financing the recovery and rebuilding, while maintaining ongoing services, is a key issue. – Financial sources are Cash reserves. Insurance proceeds. Private donations. Federal funds. 5