WASHINGTON — Superstorm Sandy packed a bigger economic punch than most people had thought.
In its sweep through the Northeast, the storm halted sales at major retailers at the start of the crucial holiday shopping season, closed factories and slowed home sales in one of the most densely populated areas of the country.
On Thursday, for example, Kohl's, Target and Macy's blamed the storm for weak sales in November. Macy's and Nordstrom Inc. reported their first monthly sales drop since late 2009, when the U.S. economy was just emerging from the Great Recession.
And the government said this week that new-home sales plunged 32 percent in the Northeast last month and nearly 12 percent in the South. By contrast, sales surged nearly 63 percent in the Midwest and nearly 9 percent in the West.
Sandy is being blamed for about $62 billion in damage and other losses in the U.S., most of it in New York and New Jersey. It's the second-costliest storm in U.S. history after Hurricane Katrina, which caused $128 billion in damage in inflation-adjusted dollars.
New York is seeking $42 billion in federal aid, including about $9 billion for projects to head off damage in future storms. New Jersey is seeking nearly $37 billion in aid, including $7.4 billion for future projects.
Still, reports this week showed that the economic damage was confined mainly to the Northeast. In other parts of the country, the economy picked up in early November, when many New Yorkers were still without power.
And next year, rebuilding efforts in the Northeast could help jump-start the broader U.S. economy. That's especially true if Congress and the White House reach a budget deal that prevents sharp tax increases and spending cuts from taking effect in January.
Homes must be rebuilt, cars need to be replaced and many people are likely to step up spending once the storm's impact starts to fade. All that would help accelerate growth.
The U.S. economy grew at a moderate 2.7 percent annual rate from July through September, the government said Thursday. Weaker growth is predicted for the October-December quarter.
Sandy shut down businesses from North Carolina to Maine and cut off power to 8 million homes in 10 states. Many people could not go to work and weren't paid for weeks.
Applications for unemployment benefits rose to an 18-month high in the first week of November, driven by a surge in applications in New York, New Jersey, Pennsylvania and Connecticut.
Such applications have fallen sharply since. But the increase earlier this month will likely depress job growth for November. Many economists predict that net job growth for November will range between 25,000 and 75,000 – well below the 171,000 jobs added in October.
A Federal Reserve survey released Wednesday said economic activity in October and early November slowed from the previous six-week period in three of its banking districts covering territory from Philadelphia to Maine. That contrasted with the Fed's nine other banking districts, which all reported improvement in growth.
"The storm caused bottlenecks in the production process," said Joel Prakken, senior economist at Macroeconomic Advisers. "If you don't have electric power and transportation, you can't do a lot of things."
The lingering damage from the storm is weighing on the economy at a time of great uncertainty caused by the approaching "fiscal cliff." That's the name for automatic tax increases and spending cuts that will take effect without a federal budget agreement.
Most economists predict economic growth will slow to an annual rate below 2 percent in the October-December quarter. And some say the rate will likely be closer to a meager 1 percent. Prakken said the storm could end up lowering the growth rate by a half percentage point.
But by next year, Prakken said cleanup and rebuilding will start to add to U.S. economic growth.
Many analysts say the region is poised to rebound quickly. Economists at the New York Federal Reserve Bank said Thursday that they expect the economy in the New York region to be back on track by early 2013. Recovery in hard-hit New York communities like Long Beach and the Rockaways will take longer, though.
In the first three months of 2013, the economy's growth could rebound to a rate of 2.5 percent, said Nigel Gault, chief U.S. economist for IHS Global Insight. Gault predicts a 0.4 percentage point boost from the rebuilding and other factors related to Sandy.
"We think that growth will improve as we go through 2013, but that is contingent on us not messing things up by going over the fiscal cliff," Gault said.
Associated Press writer Karen Matthews contributed to this report from New York.
At least 30 people were reported killed in eight states along the eastern seaboard by Sandy, which dropped just below hurricane status before making landfall on Monday night in New Jersey. Some people were hit by trees, others died in flooding, from electrical shocks or in car crashes linked to the storm. One woman in Toronto was hit by flying debris. Sandy killed more than 65 people in the Caribbean last week before pounding U.S. coastal areas. President Barack Obama issued federal emergency decrees for "major disasters" in New York and New Jersey. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
More than 1 million people in a dozen states along the storm's path were ordered to evacuate, as homes sunk underwater and fierce winds toppled trees. The Red Cross estimated its shelters housed more than 11,000 people across 16 states. New York City Mayor Michael Bloomberg said the city's shelters housed 6,100 people. The city said shelters would remain open until residents can safely return to their homes. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
Power And Telecom Outages
More than 8.1 million homes and businesses on the East Coast of the United States were without power on Tuesday after the storm tore down power lines, flooded networks, and sparked an explosion at a power station on Manhattan's East River. That compares to 8.4 million outages at the peak of Hurricane Irene last year. The outages spread from New Jersey, which was hardest hit, to 19 other states from North Carolina to as far inland as Indiana. Power companies estimate parts of New York City could be without power for more than a week. An additional 145,000 people lost power in the Canadian province of Ontario. The storm disrupted cellphones, home telephones and Internet services in at least eight states in the northeast. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
Flooding And Fires
New Jersey was the worst hit. Three towns in New Jersey just west of New York City were inundated with up to 5 feet (1.5 metres) of water after a levee on the nearby Hackensack River was overtopped or breached. Seaside rail lines washed away, floodwaters forced police and fire departments to relocate their operations, and parts of the coast remained underwater. In New York City, neighborhoods along the East and Hudson rivers in Manhattan were underwater, as were low-lying streets in Battery Park near Ground Zero, where the World Trade Center once stood. The total area flooded by the storm is still unknown. The unprecedented flooding hampered efforts to fight a massive fire that destroyed more than 80 homes in the New York City borough of Queens. Mayor Michael Bloomberg said there were at least 23 serious fires across the city. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
Transportation ground to a halt along the U.S. Northeast coast starting from Monday, stranding local rail commuters, air travelers and cruise passengers from as far away as Europe and Asia, as Sandy prompted closure of air, rail, ship and even highway service. The transport woes also hit cargo operations. New York closed seven major bridges. New Jersey closed one of its busiest toll roads due to flooding. More than 15,773 flights have been canceled so far as a result of Sandy, according to the flight tracker FlightAware. A tidal surge paralyzed New York City's subway system, the nation's largest, in the worst disaster to strike it in its 108-year history. The Metropolitan Transportation Authority said it could take up to four or five days to get the water out of the flooded train tunnels. Mass transit was also shut on Monday and part of Tuesday in Philadelphia and Washington. The Boston public transportation system reopened on Tuesday morning. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
The storm interrupted the presidential campaign a week before Election Day, forcing President Barack Obama and his Republican challenger, Mitt Romney, to cancel appearances. Sandy added a new level of uncertainty to an already tense, tight race for the White House. Obama will stay in Washington on Wednesday after canceling a third campaigning day. Obama, who has made every effort to show himself staying on top of the storm response, drew praise from Republican New Jersey Governor Chris Christie, who has been a strong Romney supporter. Romney converted what had been intended as a campaign event in Kettering, Ohio, on Tuesday into a "storm relief event." He urged Americans to show generosity in helping the East Coast. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
The monster storm closed U.S. stock markets for two days this week, the first time markets had consecutive unplanned closures due to weather since a massive blizzard shut them down in 1888. The unplanned closure on Monday was the first since the Sept. 11, 2001, attacks. Bond markets were also shut on Tuesday. Some analysts estimated banks and trading firms could lose tens of millions of dollars in revenue. Major U.S. stock exchanges expect to reopen on Wednesday. The storm delayed several data releases, such as the monthly natural gas report and the weekly Crop Progress report. Dozens of U.S. companies postponed releasing quarterly results after the storm, and banks closed branches in the Northeast, while promising to waive certain fees in hurricane-threatened areas. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
The second-largest refinery on the U.S. East Coast has suffered flooding and a power outage from Sandy, while two smaller plants also lost power, and glitches threaten to slow the recovery in fuel supplies. While the region's biggest plant, in Philadelphia, and several others were ramping up operations after escaping damage, other facilities, pipelines and terminals were struggling to restore supplies that had slowed to a trickle. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
Sandy appears to have caused more losses than last year's Hurricane Irene, but final totals will be hard to come by for some time because of the scale of the disaster. One disaster-forecasting company predicted economic losses could ultimately reach $20 billion, only half insured. That would make Sandy the fifth-worst hurricane in history, based on inflation-adjusted losses. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>
Government And Schools
Federal government offices in Washington, which was spared the full force of the storm, were closed for a second day on Tuesday, and schools were shut up and down the East Coast, including New York and Boston. <a href="https://editorial.huffingtonpost.com/tmp/2045324_45.html?preview=yes">Via Reuters</a>