Rosie On Sandy: One Economist's Realistic Hurricane Post-Mortem

http://www.zerohedge.com/news/2012-1...ne-post-mortem

Tired of idiotic "expert assessments" how the destruction in the
aftermath of Sandy is good for the economy and "creates wealth" (just
ask these people or these how much wealthier they feel with their house
halfway still underwater, or with not a bite to eat)? Then read the
following brief summary by David Rosenberg what the real and full impact
of Rosie on the US will be:

- "the surprise for Q4? A negative GDP print."


From David Rosenberg of Gluskin Sheff

MISSING THE BOAT

As I read and digest the reports estimating the damage from the
devastating storm. I sense that there are far too many economists out
there who are relying too heavily on past major hurricanes as they draw
their conclusions from the current experience with Sandy.

I am concerned that as is the case so often, complacency has set in. The
consensus view of a mere decimal place impact on Q4 real GDP growth from
the storm seems like a pipe dream to me and has not been carefully
thought out, in my opinion. Of course the devastation to the capital
stock across so many dimensions affects net worth and not GDP, which
measures the flow of spending in the economy, but it is indeed the
spending portion that has also been seriously impaired, and a good part
of it is not coming back and the inevitable pickup in spending of
generators. sump pumps, cement and plywood is not going to be enough to
provide an offset, at least over the next few months. Logic should
prevail more than history here, because there is no appropriate
historical comparison, and yes, I include Katrina in that assessment.

Yes, there will at some point be a revival in building activity and
repair damage that will support spending and real GDP growth to be sure.
But something tells me that this process may be delayed somewhat as the
claims get tallied up and the fallout from the disaster continues. That
should help out first quarter activity but from a lower level and, of
course, assuming that the economy doesn't fall off any fiscal cliff.

The problem is two-fold. One is magnitude. The other is the demographic
involved. With regards to magnitude, we are talking about 60 million
people being affected, not three, or four or five million spread across
corn and cotton fields in the south. There has not been such devastation
affecting so many participants in the U.S. economy before. Were talking
about New York. New Jersey, Connecticut and Philadelphia here — not
Waco. When such masses do not go to the office, they then don't do what
they usually do. which is buy their coffee at Starbucks. They don't line
up for pizza and sushi. That spending is not coming back. They are
eating at home, and pulling out the box of macaroni and the can of tuna
fish they bought three months ago. Then there are movies, sundries and
even vacations that are not coming back any time soon into the spending
sphere. And the cabs that drive people or the sales people at the
clothing store that rings up your hill that have been out of work for
the past few days aren't making the money they need to buy burgers and
shakes and whatever else. So the ripple effect or what economists call
the multiplier also has to be taken into consideration here.

And a few days in a quarter when expressed at an annual rate is actually
a much bigger deal than a few decimals on a GDP growth figure. The
consensus, I think, is in for a big surprise. And keep in mind that the
downtrend in mortgage apps, the general weakness in the regional
manufacturing surveys, the stalling-out in the improving trend in
jobless claims and the fact that chain store sales in October were
already running below plan, reveals an economic backdrop that lacked
momentum even before the storm took hold.

The other factor I mentioned was the demographic. We don't know how many
Starbucks or Coaches there are in Waco or Galveston, but there are 255
in New York City Its not just size. It's also tastes. We are talking
about the storm hitting the most free-spending consumers in America. And
that is also because these are the states with the highest per capita
incomes — the major states of the Northeast have on average household
spending power that is 40% higher than in the deep south where storms
and floods have historically been prevalent (again rendering comparisons
with the past nearly totally useless when it comes to estimating
near-term GDP impact). These are the same northern dilettantes who the
Confederates wanted to secede from nearly 150 years ago and these
high-income/high wealth folks love to shop — not only do they have the
means compared to their southern brethren, but their marginal spending
propensities are huge and, as such, the impact on GDP from this
perspective cannot he over- exaggerated, especially the likely
depressing effect on luxury goods and services.

Of course, there is this other little problem that in many cases, basic
insurance coverage is not covered for floods. So either Uncle Sam ponies
up here or all the economists hinging their forecasts on a boom in
building activity may end up being frustrated by the length of time it
takes to get started. In the meantime, the spare room in the basement at
cousin Jack's place is going to be just fine (and Jack's 30-year old
boomerang kids just got kicked to the recreation room) and his wife's
meat loaf is going to replace the traditional one night a week out at Il
Mulino.

And don't forget one other factor that I did not mention — which is the
timing. Normally these major weather shocks happen in August or
September. We are already in November and on the precipice of the most
important time of the year for the retailing sector, which has already
staffed up in anticipation of good tidings this year. This prognosis may
have to be revisited because the temptation to shop at Tiffany's may be
just a little bit tempered by the repair bill to your principal
residence and it is also highly doubtful that cousin Jack is going to
buy a tree for his family to put in the living room and one for yours in
the basement.

So the surprise for Q4? A negative GDP print. The next question is
whether there will be a Q1 rebound. Remember, as I mentioned yesterday,
three of the major four ingredients to the NBER (National Bureau of
Economic Research) recession all peaked in tandem in July. And it would
be a slam-dunk four if the service sector had already followed
goods-producing payrolls on the road to perdition.

On 11/1/2012 11:37 PM, wrote:
On Thu, 01 Nov 2012 21:28:03 -0400, Home Guy wrote:



Certainly there are thousands of people who are homeless and they have
a big clean up coming but to think that this is going to crush the
economy is just silly.


Of course it won't but home guy only posted it to revel in the
misfortune of others...

George wrote:

Certainly there are thousands of people who are homeless and they
have a big clean up coming but to think that this is going to
crush the economy is just silly.

Of course it won't but home guy only posted it to revel in the
misfortune of others...

And the person that WROTE the piece in the first place? Did they write
it just to "revel in the misfortune of others" ?

And the blog where the piece was published? Did they post it just to
"revel in the misfortune of others? ?

What an ass you are.

Typical assinine american thinking.

If you post bad news, or a bad prediction, or criticism - it's done out
of hate. It's because you're a hater.

Of course this is going to take a chunk out of your Q4 GDP.

Do you think this is going to be a merry christmas on the east coast
this year? For retailers? For insurance companies?

On Thu, 01 Nov 2012 23:37:13 -0400, wrote:

On Thu, 01 Nov 2012 21:28:03 -0400, Home Guy wrote:

Rosie On Sandy: One Economist's Realistic Hurricane Post-Mortem

http://www.zerohedge.com/news/2012-1...ne-post-mortem

Tired of idiotic "expert assessments" how the destruction in the
aftermath of Sandy is good for the economy and "creates wealth" (just
ask these people or these how much wealthier they feel with their house
halfway still underwater, or with not a bite to eat)? Then read the
following brief summary by David Rosenberg what the real and full impact
of Rosie on the US will be:


From my experience in Florida, where we are no strangers to
hurricanes,
they will be open for business next summer, they just might not have
the roller coaster back. Beach people are tough.
snip

Certainly there are thousands of people who are homeless and they have
a big clean up coming but to think that this is going to crush the
economy is just silly.

No doubt there will be serious impact for many. Short term, yes some
will be devastated, won't have the recourses to rebuild, and will have
strong negative results.

Short term: Others are making more money than they ever have working
on recovery. I know a couple of people that will be working as much
as they can for weeks to come. They will be getting paid by insurance
companies and government entities. At the end of the major cleanup,
they will have extra money to buy new cars, new furniture, take a
vacation. That wealth will be spread around.

Long term: We will all pay. Our homeowner's insurance rates will
have to go up, those government handouts will come from taxpayers too.
Sales of appliances, building materials, carpeting and other household
goods will go up a bit too.

The experts will argue the benefits and costs to the economy, but, we
will recover and like any disaster, some people will be harmed, others
will benefit. Hopefully, we will learn where not to build houses too.