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Hurricane Sandy Damages Expected to Top $20 Billion

October 31, 2012

Planalytics shared the following article:

As the remnants of Hurricane Sandy move inland through the interior Northeast, Great Lakes and Canada, it leaves a path of catastrophic destruction in its wake. While the total economic impact will be finalized over time, initial estimates are that damages from Sandy will top $20 billion, and this will likely rise as the storm is still active and enveloping large population centers. If estimates hold, Sandy will rank in the "Top 10" of most costly storms, more expensive than Hurricane Irene in 2011, which had estimated damages of $15 billion.

The primary reasons why Sandy’s cost will be so significant are related to three key ingredients.

  1. The size of the storm. Sandy stretched over 900 miles and is extremely large in terms of storms.
  2. The population impacted. Approximately one-third of the U.S. alone is being impacted by this storm.
  3. The duration of the storm. Sandy began impacting the Southeast last weekend, and will continue to impact North America through the end of this week.


A few notable facts about Superstorm Sandy, which is an extremely rare, late season storm.

  • Sandy caused the New York Stock Exchange (NYSE) to close for the first time since 1985 due to a weather-related issue, and the first time since 1888 that it was closed for consecutive days due to weather.
  • Sandy triggered an estimated 8 million power outages so far in the U.S. with New Jersey and New York City having the largest impact, with outages being reported as far west as Cleveland. For New York City, this was its largest ever weather related power outage.
  • Sandy produced more than 15,000 flight cancellations so far, which, for reference, is much larger than Hurricane Irene which resulted in roughly 10,000 flight cancellations. In addition, mass transit as well as roads and bridges in and around the major cities of the I-95 corridor have been closed.
  • 10 states declared a state of emergency with parts of New York and New Jersey already being declared federal disaster areas.
  • Sandy brought significant snowfall to the Appalachians. Locations in western Maryland, West Virginia, Virginia, and Tennessee reported up to two feet of heavy wet snow.


Planalytics expects that some consumer activity was shifted due to Sandy, with some purchasing being moved forward. Additionally, there are millions of dollars in economic activity and productivity that was lost and simply will not and cannot be recouped.

Business Impacts So Far

Virtually all major retailers had at least 10% of their store base in the path of the Sandy. Leading up to the storm, home centers, mass merchants, and grocery stores experienced a surge in traffic as consumers were purchasing "must have" items. Additionally, quick service restaurants, gas stations and ATM’s experienced strong traffic, particularly in and around communities where evacuations occurred. Significant media coverage during the weekend leading up to Sandy’s arrival ensured consumers had ample opportunity to stock up and prepare.

Department stores and specialty apparel chains, particularly in shopping malls and strip centers, all experienced net-losses from the storm due to low traffic, especially considering the storm preparation period was over a weekend when the bulk of most retail sales take place. In addition, the storm occurred during the final weekend of retail October, and during the final weekend before Halloween.

What Happens Next?

Large-scale businesses typically have sophisticated supply chain systems and processes in place to quickly replenish products to the impacted areas and serve as a value-added member of the communities where they operate.

As Sandy continues to impact North America throughout the week, Planalytics estimates that the following need-based/consumable items will remain in the strongest demand over the coming days as consumers clean up, restore power, and get their lives back to normal.

  • Consumables: Batteries, bottled water, canned foods, packaged ice, etc.
  • Home Center Items: Generators, pumps, roofing, flooring, lumber, and other building materials as a result of the damage.
  • General Clean Up Items: Trash bags, mops, buckets, tarps, etc.


Longer Term Impacts

From a broad perspective, the long-term economic impacts of Superstorm Sandy will play out over time. Certainly Sandy is likely to result in the largest insurance losses to the industry this year, but the large scale economic impact is likely to be minimal due to reconstruction and rebuilding efforts.

From a retail perspective, there are likely to be longer term impacts, as consumers are now spending "to need" and will be doing so post storm to get their lives back in order. Significant spending now/this week is likely going to cause many consumers to revisit their holiday shopping budgets, and could impact the 4.1% growth projected by the National Retail Federation during the holiday shopping season. Retailers, particularly those selling discretionary items (apparel, accessories, etc.) who are already facing lost sales due to store closures and decreased foot traffic, may need to reduce prices and promote more heavily to drive consumers into stores, particularly in impacted areas.

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