Could Post-Superstorm Sandy Rebuilding Energize The Economy? Some economists predict that the reconstruction from the damage caused by Superstorm Sandy will produce a stimulus effect for the U.S. economy in 2013 — especially in construction and related industries. Others say the losses associated with a storm will outweigh any positive effects from the rebuilding.
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Could Post-Superstorm Sandy Rebuilding Energize The Economy?

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Could Post-Superstorm Sandy Rebuilding Energize The Economy?

Could Post-Superstorm Sandy Rebuilding Energize The Economy?

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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Hurricane Sandy did tens of billions of dollars in damage to coastal areas of New York and New Jersey. But there may be a silver lining to all that destruction. Some economists argue that reconstruction from Sandy could have a stimulative effect on the national economy in 2013.

But others are more skeptical, as NPR's Joel Rose reports.


JOEL ROSE, BYLINE: Charlie Messina uses a jackhammer to break up flood-damaged concrete in a basement in Manhattan Beach, Brooklyn. Messina owns a small business that does renovations.

CHARLIE MESSINA: Well, business picked up, of course. But I'm not happy in the terms of the way it picked up.

ROSE: Messina says he was busy even before Hurricane Sandy devastated parts of Brooklyn, Queens, and Staten Island. Now, he can barely keep up.

MESSINA: Oh, I've been working seven days a week. And after hours, 24 hour emergency service calls.

ROSE: Have you taken any breaks at all since the storm or you've been pretty much just working?

MESSINA: No, I've been working straight. The only break I took was technically Christmas.

ROSE: Messina expects to stay busy right through the spring, as more checks from insurance companies and FEMA arrive and more homeowners start to spend on repairs.

Construction contractors are in high-demand from the Jersey Shore to Long Island. And some economists say all that construction activity will give a measurable boost to the U.S. economy in the coming year.

Bernard Baumohl is with the Economic Outlook Group in Princeton, New Jersey.

BERNARD BAUMOHL: We're going to be seeing a rather hefty net increase, net stimulus to the economy because it's going to result in more hiring. And as more people get jobs, they will have more money to spend. That will benefit the entire economy.

ROSE: Baumohl concedes that the economies of New York and New Jersey experienced some short-term pain after the storm. Some businesses still haven't been able to reopen because of flood damage. But he says the coming construction boom could make up for all that and more, when you factor in all the spending on commercial real estate and public infrastructure projects like bridges and tunnels.

BAUMOHL: Not only are we talking about a repair. We're also talking about building it and fortifying these structures, so that they'll be able to withstand storms of similar intensity in the future.

ROSE: Baumohl says the Sandy stimulus effect could add as much as half a percentage point to the national GDP in 2013. But economists who've studied the impact of past storms aren't so optimistic. Ari Belasen teaches economics at Southern Illinois University, Edwardsville. Belasen looked at how the economies of Florida and the Gulf Coast rebounded after other major hurricanes.

ARI BELASEN: What it really comes down to is whether or not the one sector that benefits - construction and its supporting links - can overcome damage to the rest of the economy. With New York and New Jersey really being unable to kind of cope with this, there's no way that you can really expect any kind of immediate stimulus.

ROSE: Belasen says regions that have gotten substantial federal assistance in the past do see a rebound in economic growth, but it does not happen quickly.

BELASEN: We've looked at really a two-year lag period after a hurricane, and you'll still see that areas that are hit are a little bit below where they should have been.

ROSE: Belasen says rebuilding from Sandy may benefit some industries at the local level. But he does not think it will have a positive net impact on the national economy. Neither does Kevin Gillen, an economist at the University of Pennsylvania's Fels Institute of Government.

KEVIN GILLEN: The dollar spent stimulating the reconstruction of the Jersey Shore is a dollar that has to come from somewhere else. There's no telling how that dollar could've been spent otherwise stimulating the economy; investing in research and development, and hiring new people.

ROSE: All the economists I talked to did agree on one thing: That prospects for economic growth in 2013 are tied directly to negotiations over the fiscal cliff. They say that matters more than any stimulus effect that does or doesn't come from rebuilding after Sandy.

Joel Rose, NPR News, New York.

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