Morning Business Memo:
The financial toll from hurricane Sandy to homeowners and businesses will be massive. But estimates of the total price tag are all over the place. And after every big weather event winners as well as losers emerge. IHS Global Insight says Sandy will end up causing about $20 billion in property damages and up to $30 billion in lost business. But that’s just one of many widely varying estimates. Forecasting firm HIS says the short-term impact could be to subtract about 0.6 percent from US economic growth in the October-December quarter. Retailers, airlines and home construction firms will likely lose some business. The storm cut power to about 7 million homes, shut down 70 percent of East Coast oil refineries and inflicted much worse-than-expected damage in the New York metro area.
But longer-term the storm is unlikely to take a big toll on the economy. In fact, the upfront losses in output may be offset over time by more economic activity. Airlines, insurance companies and many retailers will take a hit. And business interruption insurance will cover only part of the losses. But Home Depot, Lowes and other home improvement firms may see a boost in their sales. Construction jobs will be created by the big rebuilding effort. Infrastructure spending on damaged roads, bridges and tunnels will boost economic activity. Many homeowners will be forced to rebuild their homes to higher standards because of local state and federal regulations. That will add to total spending.
Gasoline prices could slip some more because of Sandy. With many roads impassable, drivers won’t be driving as much, reducing demand for gasoline. Gasoline prices have been dropping since early October. Analyst Tom Kloza says that should continue over the next month November due to the storm. Only two of the Northeast’s nine refineries were knocked out of commission by Sandy, and they apparently are down because of power outages. But Kloza says it could take a while for supply to reach consumers in the region because of transportation problems.
Despite high unemployment, trucking companies continue to have a tough time hiring young drivers willing to hit the road for long hauls. An expert on distribution of goods says US is speeding toward a critical shortage of truck drivers in the next few years. This comes as the economy recovers and demand for goods increases. Georgia Center of Innovation for Logistics Executive Director Page Siplon says U.S. companies are expected to create more than 115,000 truck driver jobs per year through 2016, but the number of Americans getting trained to fill those jobs each year is barely 10 percent of the total demand. The Department of Labor says the median yearly wage for tractor-trailer drivers is $37,770, with some drivers earning more than $57,000. But trucking can be a hard sell for younger workers who don’t think it’s worth the money to spend days and weeks on the road.
Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com twitter.com/daviesabc