Slogging through the aftermath
Financial toll is in billions, but pales next to Katrina's
Irene’s churning winds and surging rains caused between $5 billion and $15 billion in damage, according to preliminary estimates, sweeping houses from foundations, turning neighborhoods into islands, and leaving millions without power.
Yet the economic impact to the 13-state region hit hard by Irene will be limited, according to economists at the Lexington forecasting firm IHS Global Insight.
“There was destruction to capital that will need to be replaced and require additional business activity, but there was also destruction to business activity,’’ US economist Gregory Daco of IHS said yesterday. “So the impact to growth going forward should not be much.’’
Some analysts have suggested that cleanup and rebuilding efforts could act as a temporary economic stimulus for a beleaguered US economy. Others reject the idea, citing the cancellation of thousands of flights and business closings as a drag on growth.
But in the context of the broader economy, neither will have much effect, according to IHS Global Insight.
Even the most pessimistic estimate of $15 billion in destruction would be a tiny fraction - less than half of a percent - of the nearly $3 trillion in economic output of the region damaged by Irene and about 0.1 percent of the nation’s $15 trillion economy.
Irene, which turned from hurricane to tropical storm as it moved up the coast, paled in comparison with Hurricane Katrina. That 2005 storm caused about $110 billion in damage and a 9.6 percent loss of regional economic activity in the four states it ravaged.
Many states are still grappling with problems related to Irene. More than 40 deaths have been attributed to the storm. National Guard helicopters rushed food and water yesterday to a dozen Vermont towns cut off from roads by flooding, and portions of upstate New York remained under water after the storm deposited more than 13 inches of rain.
In Vermont, some towns relied on airlifts; six bridges and more than 260 roadways were washed away or severely damaged by floodwaters, including a historic covered bridge in Rockingham, about 35 miles from the Massachusetts state line.
Damage assessments in Vermont are incomplete, said Jeffrey Carr, president and economist at the consulting firm Economic and Policy Resource Inc., in Burlington, Vt. But Carr said he expected the flooding to surpass a 1927 flood that had, until now, been the benchmark for all others in the state. “It’s been epic,’’ Carr said.
Most of the damage will not be insured, he said, and families and businesses facing losses may not be able to afford to make repairs or may need to cut back on other spending to do so.
Carr said tourism, which accounts for about 11 percent of Vermont’s economy, could be hurt.
“I don’t recommend this as an economic development strategy,’’ Carr said. “You never really do get back to where you were before.’’
Material from the Associated Press was used in this report. Megan Woolhouse can be reached at email@example.com.