Sandy blamed for bad sales
WASHINGTON — Superstorm Sandy packed a bigger economic punch than most people had thought.
In its sweep through the Northeast, the storm halted sales at major retailers at the start of the crucial holiday shopping season, closed factories and slowed home sales in one of the most densely populated areas of the country.
On Thursday, for example, Kohl's, Target and Macy's blamed the storm for weak sales in November. Macy's and Nordstrom Inc. reported their first monthly sales drop since late 2009, when the economy was just emerging from the Great Recession.
And the government said this week that new-home sales plunged 32 percent in the Northeast last month and nearly 12 percent in the South. By contrast, sales surged nearly 63 percent in the Midwest and nearly 9 percent in the West.
Sandy is being blamed for about $62 billion in damage and other losses in the United States, most of it in New York and New Jersey. It's the second-costliest storm in U.S. history. Hurricane Katrina caused $128 billion in damage in inflation-adjusted dollars.
New York is seeking $42 billion in federal aid, including about $9 billion for projects to head off damage in future storms. New Jersey is seeking nearly $37 billion in aid, including $7.4 billion for future projects.
Still, reports this week showed that the economic damage was confined mainly to the Northeast. In other parts of the country, the economy picked up in early November, when many New Yorkers were still without power.
And next year, rebuilding efforts in the Northeast could help jump-start the broader economy. That's especially true if Congress and the White House reach a budget deal that prevents sharp tax increases and spending cuts from taking effect in January.
Homes must be rebuilt, cars need to be replaced and many people are likely to spend more once the storm's impact starts to fade. All that would help accelerate growth.
The economy grew at a moderate 2.7 percent annual rate from July through September, the government said Thursday. Weaker growth is predicted for the October-December quarter.
Sandy shut down businesses from North Carolina to Maine and cut off power to 8 million homes in 10 states. Many people could not go to work and weren't paid for weeks.
Applications for unemployment benefits rose to an 18-month high in the first week of November, driven by a surge in applications in New York, New Jersey, Pennsylvania and Connecticut.
Such applications have fallen sharply since. But the increase earlier this month is likely to depress job growth for November. Many economists predicted that net job growth for November will range between 25,000 and 75,000 — well below the 171,000 jobs added in October.
A Federal Reserve survey released on Wednesday said economic activity in October and early November slowed from the previous six-week period in three of its banking districts covering territory from Philadelphia to Maine. That contrasted with the Fed's nine other banking districts, which all reported improvement in growth.
“The storm caused bottlenecks in the production process,” said Joel Prakken, senior economist at Macroeconomic Advisers. “If you don't have electric power and transportation, you can't do a lot of things.”