by Staff Writers
New York (AFP) Nov 29, 2012
Superstorm Sandy, which battered the Northeast a month ago, should not significantly slow the US economy in the fourth quarter, a key Federal Reserve official said Thursday.
New York Fed president William Dudley said he expected the storm that struck New York City and the surrounding region would have "a modest negative effect" on growth in the October-December quarter.
"It is impossible to calibrate this precisely at this juncture, but I would guess this would be in the region of 0.25 to 0.50 of a percentage point," Dudley said in a speech at Pace University in New York, according to the prepared text.
The powerful and deadly hurricane that struck in late October caused massive damage in the coastal region, with widespread power outages and flooding disrupting services and supplies, such as fuel, food and transportation.
Dudley said that some of the negative effects already seen in recent industrial production and other indicators, had been offset in part by additional economic activity spurred by the disaster.
For example, demand had increased for portable generators during the power outages.
In addition, reconstruction likely would spur somewhat stronger economic growth than otherwise would have been expected, he said.
Economic studies show that natural disasters in advanced economies usually have negligible impact on longer term GDP growth, Dudley noted.
"Given the resilience of the US economy, I expect the long-run effects of Sandy to be similarly small," he said.
The government announced Thursday that US growth in the third quarter was stronger than previously thought -- hitting an annual rate of 2.7 percent instead of the prior estimate of 2.0 percent.
The GDP report, however, showed weakening in key growth drivers, including consumer and business spending, that analysts said pointed to a significant slowdown in the current quarter, to a pace of 1.0-1.5 percent.
Dudley said that even before Sandy struck, growth has been disappointing.
The unemployment rate, currently at 7.9 percent, remains "unacceptably high" amid the slow growth, he said.
"Although the economy continues to expand, we must grow faster if we are to put all of our jobless workers and idle businesses back to work," he said.
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