A new study out from the New York Office of the Federal Reserve asks a provocative question: Could the economic benefits of rebuilding after Superstorm Sandy end up being a net positive for the New York/New Jersey economy? There are two huge sources of funds from the storm, $60 billion in federal disaster relief and $20 billion in insurance payouts. Could that be worth more than the devastation of the storm has cost us?
The Fed's economists end up answering no. The biggest reason is that, although those amounts sound significant, they total just over 6 percent of the economic activity in the metropolitan area, which is $1.3 trillion. So it's not going to make that much of a dent.
On the other hand, the improvements may end up boosting productivity beyond just bringing our infrastructure back to what it had been before the storm. For instance, the MTA is receiving $3.8 billion to upgrade damaged electrical equipment, much of which was old and frail to being with. That should help our transit systems run even better than they did prior to the storm.
The New York Fed's entire report can be found here.
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