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Times Union – Irene’s Economic Toll

COLONIE — On Friday, the shelves where generators are kept at the Lowe’s Home Improvement store in Latham were bare.

The supply of flashlights and batteries was quickly dwindling.

Whether the same will be true of chain saws and lawn bags on Monday depends, of course, on the amount of damage that Hurricane Irene inflicts today.

A storm with the predicted intensity of Irene, particularly when it strikes a densely populated area, can have a huge impact on the economy.

Travel is disrupted, offices and schools may be closed, and of course there’s the unpredictable damage a natural disaster can cause.

Airlines and Amtrak waived change fees as Irene approached, and many air passengers were already rebooked on flights for after this weekend.

Still, those carriers faced the added costs of moving aircraft out of harm’s way, while Amtrak stationed repair crews throughout the Northeast to quickly clear debris and repair trains, tracks and signals after the storm passes.

New York City and New York state have spent a lot of money preparing for this storm, and if it’s a bad one, much more will be spent on repairs and recovery. That will leave less to spend on other needs.

Both locally and nationally, this has been a particularly bad year in terms of property damage and, tragically, loss of life.

A series of tornadoes this spring demolished large swaths of Tuscaloosa, Ala., and Joplin, Mo., and claimed hundreds of lives. Deadly tornadoes also struck central Massachusetts, and caused extensive damage in Springfield and several other towns.

If all this spring’s tornadoes were considered as one disaster, it would be the fifth most expensive on record, said Steve Weisbart, senior vice president and chief economist for the Insurance Information Institute.

In terms of losses, “it was the worst April and May we’ve had,” Weisbart said.

So far, insured losses nationwide are in the $20 billion to $25 billion range for the year, he said, not including what will happen when Irene blows through.

This will be the fifth year since 2001 losses have topped $25 billion.

“Before 2001, it had never happened that we had a year with $25 billion in losses,” Weisbart said.

The insurance industry has adequate reserves to pay claims from Irene, he said.

But not all losses may be covered.

Weisbart and David Neustadt, a spokesman for the state Insurance Department, both cautioned that a homeowner’s property insurance doesn’t cover flood damage.

“Wind damage is covered,” Weisbart said, but flood damage is covered only through a separate policy available through the National Flood Insurance Program.

That program, by the way, hasn’t been renewed by Congress and expires Sept. 30. And if you don’t have flood insurance, it’s too late for Irene. There’s a 30-day waiting period.

But there is a silver lining to this dark cloud. The insurance money that is paid out can have a stimulative effect, some economists say, as workers are hired to rebuild structures and make other repairs.

Government spending further stimulates the economy, as bridges and highways are repaired.

“For every dollar the city or state has to pay, that’s an extra dollar those wage earners have,” said one economist who spoke on the condition he not be identified, as required by his employer.

Retail sales usually spike before a storm as shoppers stock up on generators, batteries and food and other necessities.

“If it doesn’t hit us that hard, it’s a boon to the retail market,” said Tony Riccardi, a private economist in Albany. “Everyone bought batteries, plywood and this and that, and stocked up.”

“The home improvement stores, hardware stores and grocers are going to do very well,” said Rebecca Flach, vice president of membership and communication for the Retail Council of New York State in Albany. “On the down side, we’re at this critical part of the back-to-school sales.”

Bad weather could keep shoppers at home, and a strong hurricane could even damage stores, keeping them closed while repairs are made.

On the other hand, if the storm weakens, “people may try to get to do some shopping,” she added, if stores are able to open today. Merchants “are put in this delicate balance between serving their customers and protecting their employees,” Flach said.

At least some of those purchases may only be delayed, not lost.

“In most cases, whatever you might have planned to do that day, you might do later,” said one economist.

Is there any good that can come from any of this? Perhaps.

Weisbart, the Insurance Institute economist, points out that the tornado-devastated community of Tuscaloosa is assessing its physical losses and asking itself, “what can we do to make this into something good?”

A blog, Tuscaloosa Forward, has given citizens a chance to offer suggestions and comment on the city’s rebuilding plans.

“I am excited to see the city taking such a great step with proper planning,” wrote one, “to ensure that Tuscaloosa can be rebuilt as an even better place.”

SOURCE: TIMES UNION

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