Superstorm may end up slowing US economy slightly, pushing gas prices up

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The streets surrounding the New York Stock Exchange are deserted as financial markets remain closed for the second day due to superstorm Sandy, Tuesday, Oct. 30, 2012. Superstorm Sandy could mean a slower economy and higher gas prices in coming months, though reconstruction will help cushion the economic blow (AP Photo/Richard Drew)

WASHINGTON – Superstorm Sandy could mean a slower economy and higher gas prices in coming months, though reconstruction will help cushion the economic blow.

The storm will end up causing about $20 billion in damage and an additional $10 billion to $30 billion in lost business activity, according to IHS Global Insight, a forecasting firm.

That could subtract about 0.6 percentage point from U.S. economic growth in the October-December quarter, the firm says.

Some forecasters are more optimistic. Paul Ashworth of Capital Economics says the overall hit to the economy will likely be “very modest.”

The storm cut power to more than 8 million homes, shut down 70 per cent of East Coast oil refineries and inflicted unexpected damage in the New York area, which produces about 10 per cent of U.S. economic output.

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