by Bill McBride on 11/07/2012 09:49:00 AM
Wednesday, November 07, 2012
The economic data has already shown some impact from Hurricane Sandy, and we will see more over the next couple of months. As an example, auto sales were down in the Northeast at the end of October, home listings were down in New York and New Jersey in early November, and this morning the MBA reported mortgage applications were down sharply in those states.
Goldman Sachs analysts Sven Jari Stehn and Shuyan Wu tried to quantify the short term impact: The Effect of Hurricane Sandy on Near-Term Economic Activity
1. Employment dips and rebounds ... Both nonfarm payrolls and household employment typically fall one month after landfall and then rebound in the following two months. Our estimates suggest that the hit of Hurricane Sandy on November employment might be around 20,000 with a rebound in December and January. ...This will be something to keep in my mind as data is released over the next couple of months. Best wishes to all recovering from the hurricane.
2. ...as claims rise and fall slowly. Initial jobless claims typically rise over the first three weeks after landfall before gradually falling back over the subsequent two months. Our analysis suggests that Hurricane Sandy might push initial jobless claims up by around 14,000 in the week ended November 17 and that it might take until late December for the distortion to disappear entirely from the claims report.
3. Small effects on housing and manufacturing. ... we find that housing starts tend to rise only by a few thousand units in the aftermath of storms as rebuilding of damaged houses begins. Regional manufacturing surveys typically weaken following hurricanes, but the effect is small. Our results would suggest that manufacturing surveys in the affected states—the Empire and Philadelphia Fed indexes—might weaken temporarily by a point or two in December due to Hurricane Sandy, but this is likely to be hard to distinguish from statistical noise.
[W]e conclude that we should expect a notable hit to labor market indicators but only small effects on regional manufacturing surveys and construction activity over the next couple of months.