Blackout Cost Estimated at $4B-$6B
NEW YORK – The blackout that stranded millions of travelers, halted assembly lines and spoiled tons of food cost an estimated $4 billion to $6 billion, no more than a temporary ripple in the economy, experts say.
"It is a minor nuisance, as opposed to a major disaster," said David Wyss, chief economist at Standard & Poors (search). He added that the closures were too short to have a significant effect on overall manufacturing and the retailing industry.
Mark Zandi, chief economist at Economy.com, said most of the losses would be recouped in the next few days and weeks. Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Inc., estimated that merchants made up two-thirds of their $30 million lost business on Saturday.
There were even some winners.
Liquidation.com, which sells excess goods from retailers, experienced a surge in goods brought online this past weekend.
Home Depot, the nation's largest home improvement chain, and its second-ranked rival, Lowe's Cos., both did big business in generators.
But plenty of others suffered.
"The biggest losers are the ones that have been losing for the past three years ... the cities, airlines and small retailers," Zandi said.
As disasters go, it won't make the Top 10 and probably not even the Top 20 in terms of insured property losses, according to Insurance Services Office Inc., a Jersey City, N.J.-based advisory company.
The company defines a catastrophe as a single incident or series of related incidents -- man-made or natural -- that cause insured property losses totaling at least $25 million and affect a significant number of policyholders and insurers.
The blackout is expected to reach at least that level but fall far short of the $2.2 billion price tag for the April 2001 tornadoes in the Midwest and South and the winter 1993 storm in the Northeast, which tied for No. 9. The costliest disaster on the list was the Sept. 11, 2001, terrorist attacks at $20.7 billion, followed by Hurricane Andrew (search) in 1992 at $19.9 billion and the 1994 Los Angeles earthquake at $15.2 billion.
The state and local governments, particularly in New York, took the biggest hit from the blackout.
New York City comptroller's office estimated that losses topped $1 billion, including $800 million in lost gross city product -- half of that in the first 24 hours. The figure also includes $250 million in frozen and perishable foods that had to be dumped, spokesman Michael Egbert said.
The blackout cost the city's 22,000 eateries alone between $75 million to $100 million in wasted food and lost business, the New York State Restaurant Association (search) calculated.
Broadway lost $1 million worth of tickets for shows canceled after the lights went out Thursday, and Jed Bernstein, president of League of American Theatres and Producers (search), estimated that theaters will only recoup about half those sales.
"Broadway shows are thinly capitalized compared to other industries," Bernstein said. "Any unforeseen loss is potentially damaging to shows."
In addition to the comptroller's figure, Mayor Michael Bloomberg (search) added an estimated $40 million in lost tax revenue and $10 million in overtime pay for city workers, including extra police officers on patrol Thursday night and sanitation crews that worked through the weekend to pick up spoiled food.
Michigan officials remained uncertain of the extent of the effect there, but economists estimated that it will be in the hundreds of millions of dollars. In hard-hit Cleveland, officials hoped to release cost estimates by Wednesday morning.
The airline industry, which lost several days of travel, was in the midst of assessing the damage. Officials declined to comment on costs, but Ray Neidl, who follows airlines for Blaylock & Partners, estimated the loss at $10 million to $20 million, "similar to what a very bad snowstorm would be."
Automakers said it still was too soon to estimate blackout related costs but expressed confidence that they will make up most of the lost production.
General Motors Corp., DaimlerChrysler AG's Chrysler Group and Ford Motor Co. restarted all their affected U.S. factories Monday.