Natural disasters like hurricanes and earthquakes damage or destroy productive physical assets like factories, stores, housing, and public infrastructure (the capital stock); they interrupt economic activity (the flow of goods and services produced in a quarter, as measured by gross domestic product or GDP). During the disaster and in its immediate aftermath, economic activity will likely be depressed below what it otherwise would have been depressed spending during the crisis is merely postponed and made up later. Meanwhile, the repairing and rebuilding of housing, buildings, and infrastructure generates jobs and greater demand for building materials and other goods and services. Those activities may well generate enough jobs and economic activity to boost GDP above what it otherwise would have been for a while after the initial dip.
Repaired and rebuilt homes, stores, and infrastructure may well be better built and sounder than what they replace but, in the meantime, the economy will not be as productive as it would have been without the damage. http://www.dailyfinance.com/2012/10/30/economic-impact-from-hurricane-sandy-wont-derail-economy/ Airlines have canceled thousands of flights, stranding travelers around the globe. Insurers are bracing for possible damages of $5 billion. Retailers face shrunken sales. nation's big stores are expected to lose billions, and the losses could extend into the crucial holiday shopping season. Sales at department stores, clothing chains, jewelers and other sellers of non-essential goods are expected to suffer the most.
http://www.huffingtonpost.com/2012/10/30/hurricane-sandy-economic-impact_n_2042820.html
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