Each passing minute on Manhattan brings New Yorkers that much closer to restored power, running water and Internet. It also represents thousands of dollars in lost economic activity for the city, thousands that are quickly turning into millions. And those millions are just as quickly turning into billions.
The latest assessment from the city's comptroller, John Liu, put the economic damage of Hurricane Sandy at $200 million a day in an interview with Reuters on Tuesday evening. That covers everything from pizza slices that weren't sold to Statue of Liberty T-shirts that weren't bought to deals on Wall Street that weren't made. "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," said Liu. "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."
As the waters recede and folks slowly start emerging from their apartments, things were starting to get back to normal on Wednesday. Nevertheless, as officials not only in New York but also New Jersey, Connecticut and surrounding states gain a better understanding of how much damage has been done, the total expected cost of the disaster keeps going up. On Tuesday, the risk modeling company EQECAT estimated that Sandy would end up costing between $10 and $20 billion, $5 to $10 billion of which would be insured. IHS Global Insight put the total damage costs as high as $50 million -- $20 million in property damage and $10 to $30 million in lost economic activity. If the upper end of IHS's estimates turn out to be true, Sandy could be the second most expensive hurricane in American history, after Katrina's $108.4 billion worth of damage.
Don't worry. Somebody will figure out a way to pay for all of this. As The Atlantic's Derek Thompson pointed out in a blog post on Monday, these kinds of disasters end up not affecting the economy that much in the long run. FEMA will probably cover about 75 percent of the recovery costs, and over time, the influx of private insurance and construction dollars that will flow into the region could even have a positive effect.