Retailers hit hard by superstorm, economy expected to rebound
NEW YORK — While it may be days, even weeks, before the full extent of the damage caused by Hurricane Sandy is known, economists are forecasting that retail sales will be impacted in October and November but that the economy overall will experience an uptick.
Retailers across all categories closed stores on Monday as Sandy made its approach. Wal-Mart, for example, had closed 33 stores as of 11:45 a.m. ET on Monday, according to a Wall Street Journal report, with most of those stores located in Delaware, Maryland, Connecticut and New Jersey. Target had closed 12 stores by Monday morning and told WSJ it would likely close additional stores throughout the day and into Tuesday and Wednesday.
Macy’s had closed 130 stores by Monday morning, as well as its New York City offices. Best Buy closed more than 100 stores across the Northeast, and Foot Locker said it would close about 200 stores in all.
Most retailers, however, expressed relief that the storm didn’t hit over a weekend and that, even better, it fell on what are typically the slowest sales days for retail.
Citigroup retail analyst Deborah Weinswig told WSJ that she expects a mixed bag for retailers because of the storm. Hurricane Sandy will "disrupt last minute Halloween sales and mall traffic but drive stock-up trips to discounters," she said.
In total, however, economic losses from the storm will likely exceed the $12 billion to $16 billion in damage from Hurricane Irene, which battered the Northeast in August 2011. Some of the latest estimates are that Hurricane Sandy’s damage may reach $35 to $45 billion.
The storm forced the New York Stock Exchange to close for a second day, and the ports of New York and New Jersey have been closed and evacuated. All the closures will mean lost wages, production and sales for businesses throughout the region, which makes up about 15% of the nation's economy. Business lost by department stores could be made up in coming weeks but foregone restaurant sales will not be recovered, Diane Swonk, chief economist of Mesirow Financial, told the Detroit Free Press. Grocery stores and home-improvement outlets are realizing net gains as customers have stocked up on water, generators, flashlights and batteries. Online retail will likely experience an uptick as thwarted shoppers turn to the Internet to make purchases.
Swonk also said that homeowners forced to repair damage will likely make further renovations that they've put off, boosting economic growth. The storm is "unleashing pent-up demand," she says. "It's the most perverse stimulus to the economy." Swonk estimated that Hurricane Sandy will add from two-tenths to half a percentage point to economic growth this quarter.