Will Sandy's damage move the GDP needle?

At a certain level, a storm can affect gross domestic product. This time, the impact may be less than feared.

By Jim Cramer Oct 30, 2012 9:23AM

TheStreet.com logo

Digital Vision Ltd., SuperStockA bit bigger than Irene but not a Hurricane Andrew and certainly not a Katrina?

 

The initial reports, which are probably in the ballpark, are saying Sandy may have done as much as $20 billion in damage. To put that into perspective, last year's Irene was about $15 billion, Andrew was $55 billion, and Katrina came in at $108 billion.

 

Why do these numbers matter? Because at a certain level, a storm can move the gross domestic product needle, as Andrew did back in 1992 as a massive federal effort rebuilt thousands of homes in rapid fashion.

 

The Katrina response, while large, did not produce much of a bump, in part because it wasn't a simple private insurance and federal check infusion. But it did come close to wiping out a lot of insurers that simply hadn't laid off enough risk. That does not look to be the case, judging by the action in the large European reinsurers, which are trading as if this event will lead to higher premiums and more profitability.

Last year's Irene did produce the private-insurance-fed-check boost, but it didn't do much for stocks, and the usual suspects -- the insurers to the downside and the housing plays to the upside -- didn't move much.


What people have to remember is that the without-power stories do not affect the economy, even as they affect people's lives. The major economic impact to flooding is mold, and unless the wet wallboard is pulled immediately, there are long-term effects that can render a house uninhabitable.

 

But again, that doesn't produce a boost that would make you want to buy shares in any of the usual home improvement names.

 

I think right now the judgment will be that more businesses was lost than will be found and the stocks of companies with numbers that will be cut will readjust to new levels quickly.

 

Jim Cramer's Face

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust.

 

 

 

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241Comments
Oct 30, 2012 12:41PM
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No doubt there will be infusion in home rebuilding and repairing due to this storm.  Insurance companies will dish out hundreds of millions on claims and this will create jobs in the industry.  A natural disaster that destroys properties usually helps the economy.  Let's not give any politician any credit on job creations after this storm.
Oct 30, 2012 12:39PM
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Obama spent the night searching Youtube for videos that caused the storm.
Oct 30, 2012 12:14PM
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obama will need multiple miraculous events to take place.  Hardly anyone is fooled by him any more.  If you are fooled by him, shame on you for not knowing any better.!
Oct 30, 2012 12:38PM
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In one week, you have a choice.

Vote for the Mormon

or

Vote for the Moron

Oct 30, 2012 12:25PM
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ALGORE -

Earlier this month the Washington Post's Carol Leonnig reported that the former vice president's wealth is today estimated at $100 million, up from less than $2 million when he left government service on a salary of $181,400. How did he make this kind of money? It wasn't his share of the Nobel Peace Prize. Nor was it the book and movie proceeds from "An Inconvenient Truth."

Instead, as Ms. Leonnig reports, "Fourteen green-tech firms in which Gore invested received or directly benefited from more than $2.5 billion in loans, grants and tax breaks, part of President Obama's historic push to seed a U.S. renewable-energy industry with public money."

That's nice work if you can get it—at least if you're on the investment-management end of the deal. But what if you're on the worker-bee end?

The Post story mentions one of the beneficiaries of Mr. Gore's investment acumen, Milwaukee-based ,  which won a $299 million award from the federal government in 2009 to make electric-car batteries. Here's how that worked out:

"The company has dramatically scaled back, after executives concluded demand for electric cars was far lower than the administration forecast. The factory outfitted with stimulus funds is nearly idle, and plans to build a second plant have been postponed."

Oct 30, 2012 12:16PM
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If the government stopped its massive deficit spending and blatent statistical manipulation, and then reported the true numbers to us, the GDP would really move, but not in the direction Cramer wants. 
Oct 30, 2012 12:27PM
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Emptyhead...the check is in the mail...hang on, you can make it. 

Don't forget to pick up your free cell phone and cheese too.
Oct 30, 2012 12:25PM
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Empty Chair talks to himself, continues to incoherently ramble on and those (lefty) whacks once again nod there heads in agreement.
Oct 30, 2012 12:34PM
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THIS PRESIDENT IS A DISGRACE TO AMERICA LIEING ABOUT PEOPLE GETTING KILLED AND EVERYTHING ELSE. WHAT A DECIEVER TELLS U WHAT HE THINKS U WILL LIKE TO HEAR. COVER UP EVEN ON FAST-FURIOUS.
Oct 30, 2012 12:03PM
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I see the party of Marx, Castro, Chavez, America sucks,kill the babies, kill the Jews, praise be to Allah, redistribution, huge nanny state government, I can't live without a bureaucratic mouth breather holding my hand and nothing is ever too expensive is out in full force today. Only two more days until your government check is delivered. You can make it, just be calm and Obama will guide you to the light.
Oct 30, 2012 12:09PM
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Storm aside, I hope they close the stock markets for 100 years. We'd all be better off.
Oct 30, 2012 12:24PM
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Wall Street Journal -

When the history of this administration is written, maybe someone will note the dissonance between the president's hip persona and his retro ideology. Here was a man who promised a "transformative" presidency. Yet when transformation came, it amounted to a two-pronged attempt to impose, from one side, a version of European social democracy by way of ObamaCare, and from the other side a version of Chinese state-directed "capitalism" by way of the stimulus.

As a political matter it may have been Mr. Obama's good luck that the bankruptcy of both models became obvious only after he had gotten his way legislatively on both. Yet the president's sagging fortunes have everything to do with his buying into an ideological enthusiasm too late. In a different age, Mr. Obama would have been the guy who went out and bought an Edsel. In this age, Mr. Obama is the guy demanding that you buy an Edsel, too. That car is today called the Volt.

Mr. Obama might still squeak by. He has, in addition to incumbency and a vestige of likability, the benefit of a challenger who only found his stride very late in the campaign. But a second term will mean four years of spent ideas packaged in shopworn rhetoric, to be shoved down the national throat by a president with nothing politically to lose.

Sound appealing?

Oct 30, 2012 12:00PM
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Emptychair

Looks like your talking to an empty room here today.

Oct 30, 2012 2:49PM
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Speaking before an audience of Australian students, President Barack Obama’s “America Sucks” Tour rolls on – this time putting down school students in the United States. First Lady Michelle Obama has already called them fat. Now her husband delights in calling them stupid.



Within the same week as he put down America for having grown soft and lazy (doing so between rounds of golf in Hawaii) President Obama has now focused his always constant derision for all things American by laying blame on American school kids – indicating they are almost from birth “falling behind” – thus Obama’s desire to radically reform the public school system. (that means he wants more funding for his school union friends of course)

Oh – and let us not forget that the Obama’s send their own kids to private school.
Oct 30, 2012 1:48PM
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Obama says he is going to stop the rise of the oceans.....


LOL...Moron

He can't even stop Biden's mouth
Oct 30, 2012 1:35PM
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"Gaffes hurt GOP Senate hopes"

Tell me they're kidding!!!!

This from the media source that supports the "GAFFE-MASTER" Joe Biden!

MSN has now joined forces with Comedy Central..........................
Oct 30, 2012 1:44PM
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This Extreme weather is ALL BECAUSE OF GLOBAL WARMING.....




LOL........moron



List of New York hurricanes encompasses 84 tropical or subtropical cyclones that have affected the state of New York since the 17th century. The state of New York is located along the East coast of the United States, in the Northeastern portion of the country. The strongest of these storms was the 1938 New England Hurricane, which struck Long Island as a Category 3 storm on the Saffir-Simpson Hurricane Scale. Killing more than 600 people, it was also the deadliest. Tropical cyclones have affected the state primarily in September but have also hit during every month of the hurricane season, June through November. Tropical cyclones rarely make landfall on the state, although it is common for remnants of tropical cyclones to produce heavy rainfall and flooding.

Oct 30, 2012 12:33PM
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Emptyhead, the DNA  tests say that there is a 99% chance I am your father.
Oct 30, 2012 2:18PM
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Hey TWIT,

Who are you going to blame in a week, when the American Public runs your Messiah and his Clown Prince, out on a rail? Will that be GW's fault too?

You're grasping at anything you can, but it won't do you any good, because the majority of the public is not as dense as you obviously are.....
Oct 30, 2012 2:51PM
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Keep working, millions of those dependent on ObamaChecks are cheering for you.
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