As much of the east coast begins to recover from “Superstorm Sandy” there is some good news for part of the economy. Yep, that’s construction, builders and the stores that supply them.
As the New York Times points out:
Bad news for hurricane-ravaged homeowners is good news for at least one contingent: construction companies and the army of workers they plan to hire, many of whom have been idled and ailing from the housing bust for nearly half a decade.
Two days into the destruction from Hurricane Sandy, phones were ringing nonstop at Garden State Public Adjusters in Marlton, N.J., ProStar Residential Disaster Cleanup in Milford, Conn., and other businesses along the Eastern Seaboard. Construction crews cannot get into many of the affected areas yet, because of flooded streets, detours and debris. Even so, customers were lining up, begging for help to pluck branches out of windows, suck water from basements and living rooms, and rebuild damaged roofs and homes.
It may also be good for those looking for jobs, even if it is temporary. Again, from the Times:
Businesses are hoping that the burst of construction work will draw back workers to their areas. Last year, the rebuilding efforts from Hurricane Irene attracted construction workers and insurance adjusters from as far away as Texas.
So far, though, companies said they have been inundated with more calls for work than job applicants. Some expect workers to start flowing into affected areas later this week when transportation returns to normal.
While some pleas for service are coming in steadily and urgently, it will probably take awhile for the bulk of the construction jobs to get going in earnest.
Before you cringe at how crude it sounds, natural disasters are good for the economy. That includes when the government decides to open its wallet and spend. It helps builders, workers and retailers. It may not be great for insurers, but there is a silver lining.
And we’re not just talking little numbers. Here are a few number courtesy of Bloomberg Businessweek:
CoreLogic, a real estate information service based in Irvine, California, estimated that 95,000 homes with a value of $40 billion are located in the coastal areas hit hardest by Sandy, which made landfall on the Jersey Shore the evening of Oct. 29, pushing a 13-foot (4-meter) surge of wind-driven water over levees, under foundations and into basements.
Insured losses from Sandy to onshore properties, including all types of commercial and residential real estate and items such as automobiles, will range from $7 billion to $15 billion, according to AIR Worldwide, a catastrophe-modeling firm based in Boston. Reis Inc. (REIS), a New York-based research firm, gave a preliminary estimate of total property damage from the storm of $30 billion to $40 billion, countered by reconstruction efforts valued at $25 billion to $30 billion.
“This nets out to around a $10 to $15 billion loss for the economy as a whole,” Victor Calanog, head of research and economics at Reis, said in an e-mail.
But there is the downside of some planned projects being delayed. Again from Businessweek:
U.S. construction employment is still recovering from the last recession, with about 2.2 million fewer jobs today than the 2007 peak of 7.7 million workers, according to the Bureau of Labor Statistics.
“We are likely to see localized spikes in construction employment throughout November and the winter as crews are mobilized to rebuild communities damaged by Hurricane Sandy,” Ken Simonson, chief economist for the Associated General Contractors of America, an industry trade group based in Washington, said in a statement yesterday.
The total impact on employment from reconstruction work, however, “is likely to be minimal, as planned projects in hurricane-damaged communities are put on hold while people rebuild,” Simonson said.
Despite the disaster, the cost and the general pain-in-the-butt, there will be some benefits to the terrible storm. It might be a good time to buy stock in Home Depot or Lowe’s. Everyone in the affected area is going to have a home improvement project.