WASHINGTON (AP) — Damage from Irene appears to be less than feared, a bit of reassuring news for a fragile economy.
Insured damage from Irene will range between $2 billion and $3 billion, and the total losses will likely be about $7 billion, according to preliminary estimates by Kinetic Analysis Corp. a consulting firm. Both figures are less than had been feared and will likely have little impact on the nation’s $14 trillion economy.
“Irene left several places with black eyes, but it doesn’t seem to have delivered an economic knockout,” said Ryan Sweet, an economist at Moody’s Analytics.
The estimates from Kinetic Analysis, based in Silver Spring, Md., suggest that Irene will have caused far less insured damage than the $6 billion the industry paid out after Hurricane Isabel struck the East Coast in 2003.
The long-term costs of Irene will grow as storm-ravaged areas deal with lost business, insurance claims, dislocated workers and transportation disruptions — costs that will take months to fully calculate.
Still, rebuilding and repairing the damage from the storm will likely be enough to boost economic output in the final three months of this year, economists say.
For now, power outages and flooding will close some businesses, costing workers lost pay and likely boosting temporary layoffs. Transportation and shipping may also be disrupted.
Chuck Watson, Kinetic’s director of research and development, noted that the impact on businesses was limited, in part, because the storm hit on a weekend. Even so, Watson and Sweet said small businesses on the North Carolina coast will likely lose two weekends of tourist activity, including the travel-heavy Labor Day weekend.
Millions of people have lost power from the storm, and analysts said the length of the outages and the extent of disruption to public transportation in cities like New York will help determine the economic damage.
Crews are already restoring power in Southern states hit by the storm and are starting work in the northeast.
Irene slammed into a region that is key to the nation’s economic health. The mid-Atlantic and New England are home to several major cities and account for about 16 percent of the nation’s economic output, Sweet said. The region also has about 14 percent of the country’s workforce.
That led many analysts to worry about the potential impact of a major hurricane. The economy is struggling. Any major shock could tip it back into recession. The economy expanded at a meager 0.7 percent annual rate in the first six months of the year.
Watson said his firm initially feared Irene would be much more powerful when it made landfall in North Carolina and would remain strong by the time it pummeled New York City. That could have caused damage of as much as $30 billion, he said.
But by Friday it was apparent the storm had weakened and would cause much less damage.