Sandy May Affect US GDP

Hurricane Sandy, which hit the East Coast of the United States, is expected to also hit the country’s gross domestic product. According to US economist Gregory Daco, the US GDP may be cut by as much as US$25 billion in the last quarter of the year.

The HIS Global Insight economist added that US growth for the fourth quarter may also slow down to 1 to 1.5 percent. The company’s initial forecast was at 1.6 percent.

The sentiment was echoed by Welch Consulting senior economist Stephen Bronars, who said that if people will not spend money, then the GDP would certainly take a hit.  People who regularly go to restaurants and watch Broadway shows won’t be doing those things in the next few weeks.

Another economist said that the US gross domestic product may be reduced by about 0.2 percentage points. Michael Vitner of Wells Fargo & Co. said Hurricane Sandy would have a modest negative impact on the GDP.

Sandy hit the East Coast two days ago and damaged offices and homes in New York and nearby states. It also caused major flooding and experts estimate damages to reach US$8 billion.

Analysts also expect that Sandy would have a bigger economic impact than Hurricane Irene.

The East Coast is now on recovery mode as it tries to recover from the aftermath of Hurricane Sandy.