Superstorm Sandy Breezy Point (A worker walks the roof line of a house under construction in the Breezy Point community of New Y
AP, Mark LennihanA worker walks the roof line of a house under construction in the Breezy Point community of New York's Queens borough on Wednesday, July 24, 2013. It is the first house to be rebuilt in the beachfront community where more than 110 homes burned to the ground during Superstorm Sandy in October 2012.
The intersection of hurricanes and economics is a heartless, insensitive place. If it can be avoided, you shouldn't go there.

We're referring specifically here to Hurricane Sandy.

For the Country as a Whole, Just a Blip on the Economic Radar

As we approach the one-year anniversary of the second most destructive storm in American history, thousands of people are still displaced from their homes, businesses continue to struggle, and municipalities are squeaking by on a fraction of the revenue that their now-devastated property tax rolls once generated.

Yet, from a macroeconomic standpoint, it's almost as if Sandy was nothing more than a figment of our imagination.

According to the Bureau of Economic Analysis, the domestic economy grew by a "very sluggish" 0.4 percent in the final quarter of last year -- the same period in which Sandy wrought havoc up and down the Eastern seaboard. It followed a 3.1 percent rate of growth in the third quarter.

While it's tempting to conclude that the storm had at least something to do with the sharp deceleration, the reality is that it didn't.

"Any effect superstorm Sandy may have had on aggregate economic activity in the fourth quarter of 2012 was well within the bands of the normal amount of 'noise' in quarterly GDP growth rates," concluded a handful of economists at the Federal Reserve Bank of New York earlier this year.

How Is This Possible?

This was a storm that caused almost 150 deaths. A storm that damaged or destroyed an estimated 650,000 homes. A storm that swept away $75 billion in physical capital, second only to Hurricane Katrina in 2005.

What's the disconnect here?

The answer is that destruction sows the seeds of growth, however paradoxical that may sound.

There's no better example of this than Home Depot (HD), which makes a living from selling supplies to homebuilders and renovators.

Comparable sales at Home Depot locations open at least 13 months shot higher by 7.1 percent in the three months following the storm. "New York and New Jersey were our best-performing regions, driven principally by Hurricane Sandy-related repair activity," said CEO Frank Blake.

Home Depot's chief financial officer told analysts that the chain generated $242 million in fiscal fourth-quarter revenue from "storm sales" alone -- far exceeding the $130 million that it earned in the aftermath of 2011's Hurricane Irene.

But -- and this is an important point -- the fact that some businesses and institutions profited from the storm, does not make up for the losses suffered by its hardest hit victims.

Building Foundations on Quicksand

As the one-year anniversary approaches, the media is shining an increasingly bright light on the slow rate of progress in places like Long Beach Island, N.J., and Breezy Point in Queens, N.Y.

A family profiled by The New York Times this week still owes $370,000 on a mortgage for their "gutted one-story bungalow... that engineers and FEMA inspectors agreed was damaged beyond repair in the storm." Yet, their flood insurance company concluded that they were due only $93,000, a fraction of what it will cost to rebuild.

And stories like this are legion.

On top of this, countless municipalities throughout the region have been forced to cut programs and services that were once funded by property tax rolls. Two New Jersey counties alone have seen property values fall by $5 billion thanks to storm damage. The net result has been to rob the local governments and schools of an estimated $77 million in revenue.

Assessing Sandy's Economic Legacy

At the end of the day, questions surrounding Hurricane Sandy's economic legacy aren't subject to easy answers. Some businesses benefited. Some people remain deeply affected. And if the macroeconomic scars were minimal, at ground level in the towns most affected, the storm is still far from over.



Motley Fool contributing writerJohn Maxfield has no position in any stocks mentioned. The Motley Fool recommends Home Depot. Try any of our newsletter services free for 30 days.

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29 Comments

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Carol

Insurance Company's and the U.S. Government can go to HELL and never come back. They are BOTH disgusting and need to be terminated. We the People could help each other in a much more HUMANE, CARING and SENSITIVE manner. God bless We the People and the other two can dry up and blow away. This Government is disgusting on SO MANY LEVELS.

October 28 2013 at 7:08 PM Report abuse +1 rate up rate down Reply
1 reply to Carol's comment
betty_brock

True

October 28 2013 at 10:04 PM Report abuse rate up rate down Reply
Iselin007

Sandy was nothing compared to the grief the trade deals caused the rest of the US Workforce. Towns and Cities are in a constant storm of violence, poverty, and unemployment.

October 28 2013 at 12:32 AM Report abuse +1 rate up rate down Reply
Iselin007

I heard Mcglaughlin say unemployment is really 24%. It's amazing how bean counters can air brush a economic report to make people think a recovery is near. Folks you can't hide over a 100 million people not working with fancy statistics. Here is another secret you can't plug in false SSI numbers into a Healthcare system looking for fake numbers! Equifax is supposed to weed out fraud or unqualified. Well I think false SSI numbers and other data are not qualified which is why the computers will never run correctly.

October 28 2013 at 12:27 AM Report abuse +2 rate up rate down Reply
Iselin007

Folks the only green jobs most of you will see are unloading trucks at age 55+ while visa workers sit in an air-conditioned office doing the jobs your in debt college kid should of had.
Where is your next job if it isn't in some minimum wage toilet?

October 28 2013 at 12:15 AM Report abuse rate up rate down Reply
Iselin007

Over thirty million aliens an their still telling you it is only 11 million. If they hadn't busted the unions and outsourced all those jobs with the trade deals maybe there would not have been a collapse of all those insurance pools. Once those pools shrank due to the trade deals insurance rose for everyone left to pick up the pieces of the middle class.

October 28 2013 at 12:09 AM Report abuse rate up rate down Reply
Iselin007

The politicians approved the trade deals for personal profit then they looted the unemployment funds after the outsourcing. You expect that Sandy money to go where it was intended? hah hah ha! Get real this nation is going into the toilet. The politicians could care less. What 90 million working age people not in the Laborforce? Another 11 or more million counted as unemployed? What they tried to wrok an immigration Deal during the Healthcare snafu? Folks can you see the scam yet? Gee an most of those 90 million not in the workforce came only in the last several years thanks to a failed immigration scam!

October 28 2013 at 12:03 AM Report abuse rate up rate down Reply
betty_brock

An Obamacare hotline worker here got fired for talking to Sean Hannity. That is the liberal nonexistent sense of justice.

October 27 2013 at 10:08 PM Report abuse +2 rate up rate down Reply
paddleman1928

enough with Sandy already. Get a life in the present.

October 27 2013 at 4:45 PM Report abuse rate up rate down Reply
1 reply to paddleman1928's comment
vigoddess

Your\'e right.
What about that earthquake in
Japan that may affect the entire
Pacific Ocean? Are you a
news report or a home journal?

October 27 2013 at 7:27 PM Report abuse rate up rate down Reply
Celticdremr

If you think the cost from Sandy is bad wait until the next storm and the one after that. Until people realize they have to build away from the coasts now because the weather is changing there will be gigantic Sandyish, Katrinaish every year or every other year. One of these days, NYC is going to get hit by a major storm and the subways are going to turn into fishbowls. Just wait.

October 27 2013 at 1:16 PM Report abuse +2 rate up rate down Reply
1 reply to Celticdremr's comment
betty_brock

So true. It isn't fair to use our tax money to subsidize those who choose to live in at risk places. Here is Florida it is so obvious that people build right down on the water because
they know all of us will foot their flood bill.

October 27 2013 at 9:51 PM Report abuse +2 rate up rate down Reply
nbrozzo

My 80+ year old aunt stilll has not been able to rebuild her house in Long Island. She has been displaced for all this time.......She even had flood insurance, She was just able to secure a LOAN which she has to pay back in order to make her house liveable. Still not sure how long that is going to take..........so sad!

October 27 2013 at 9:02 AM Report abuse rate up rate down Reply