Feds' new Sandy numbers don't seem to add up
The federal government put out a new Sandy damage figure this week that has startled some observers because it is strikingly low compared with the $82 billion number widely used by local officials in their push for disaster aid. The Bureau of Economic Analysis estimated Wednesday that the superstorm destroyed $35.8 billion worth of private fixed assets nationwide and $8.6 billion in government fixed assets. The numbers are the first to be released by the feds. Though the governors of New York, New Jersey and Connecticut put the damage at $82 billion, the federal figure is small even compared with the $51 billion emergency aid package Congress passed on Monday to aid victims of the storm. But "loss" and "cost" associated with the storm are words used loosely and sometimes interchangeably. In reality, the two numbers measure very different things. Standing them up side by side is like comparing apples and oranges. The Bureau of Economic Analysis numbers measure the storm's direct effect on economic activity and production. The storm shuttered factories, offices and transportation facilities—which all had effects on production included in the data the feds use to prepare GDP estimates. But the figure does not take into account all of the physical damage caused by the storm. For example, if 1,000 cars were destroyed by the storm, the property destruction itself would not figure directly into GDP numbers and therefore would not be factored into the Bureau of Economic Analysis' low Sandy damage number. Loss estimates are usually greater than economic disruption figures. And in the case of Hurricane Sandy—as opposed to a disaster like 9/11—the physical damage was huge, spread out and harder to quantify. The Bureau of Economic Analysis number includes only damage to fixed assets—things like buildings and equipment businesses would buy to produce things that turn a profit. It does not include consumer durables, like ruined food, kitchen appliances, washing machines or vehicles flooded with seawater. Perhaps the biggest difference between it and the number the governors are using: it does not include business interruption and lost work days. The federal number is "a subset of all the possible damages that could come from a disaster," said Robert Kornfeld, an economist with the Bureau of Economic Analysis. "No one has ever used our estimates of damages to get funding for anything." The $44.4 billion figure is calculated in order to estimate the effect of Sandy on the country's stock in equipment and structures, which figured directly into the GDP. That's all. Govs. Andrew Cuomo of New York and Chris Christie of New Jersey, by contrast, worked with analysts from the consulting firm McKinsey & Co. to come up with damage numbers to show President Barack Obama what they would need from the federal government to rebuild and compensate people for lost goods and work. Mr. Cuomo's number presented in Washington included: $9.7 billion for housing; $7.3 billion for transit, roads and bridges; $3.1 billion for health care; $1.6 billion for government response and repair; $1.1 billion for water and sewage treatment; $913 million for individual assistance; $794 million for parks and the environment; $462 million to make up for lost government revenue; and $343 million for schools. Mr. Cuomo submitted $6 billion for businesses, but the administration believes that figure could rise to $25 billion if business lost to the interruption is factored in.
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