Hurricane Sandy hit the US east coast in October 2012. Sandy caused heavy damages in terms of life and property. The storm disconnected the US east coast from electricity supply, fuel supply and led to disruption of transport. At least 3.6 million households lost power on account of the super storm. At least 253 people are reported to have died on account of Sandy. The economic losses are estimated to exceed USD 50 billion, making Sandy the second-costliest Atlantic hurricane.
According to Federal Reserve, industrial production fell 0.4% on a month on month basis in October. This was on account of factories operating at a relatively lower capacity due to power failures. In addition to manufacturing, the storm impacted the functioning of stock and commodities markets as well. All the major stock exchanges were shut for an extended period of around two days on account of Sandy. It was the first time since 1988 that the exchanges were closed for two consecutive days on account of bad weather. The storm led to delay in the launch of new interest rate swap contract at Chicago-based CME as the users of the contract were affected by the disruptions caused by the storm.
The sectors that were badly hit by Sandy included airline, retail, insurance, Wall Street, autos, telecom and other utilities. More than 12,000 flights were cancelled, which left many passengers stranded on the airports. Retailers also registered heavy losses as they were unable to sell merchandises during crucial holiday shopping season. Retailers normally realize majority of their revenues during the last quarter of every year. The storm is expected to negatively impact the profitability of the insurers, which are expected to face losses that are expected to exceed USD 10 billion. The stocks of insurance companies came under selling pressure on account of this. However, the industry is well capitalized and is expected to absorb losses without much hassle. Wealth management firms are claiming that Public sector authorities also incurred heavy losses on account of repairing damages to infrastructure such as tunnels and subways. In addition to electric utilities, telecom and internet services were also hit at such a crucial moment. Telecom companies had to borne incremental costs on account of arranging additional back up generators to support cell towers and meet fuel requirements.