As the East Coast digs out from the damage caused by Hurricane Irene, insurers are trying to count the costs. While numbers vary, no one expects the insurance bill to be anywhere near the $10 billion feared heading into the storm.
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Meanwhile, the total economic loss could be somewhere near $20 billion, according to Standard & Poor’s.
The airline industry needs about three days to make up for the thousands of flights canceled during the storm, according to a spokesperson for the Air Transport Association.
And floods, winds and rain wiped away one of the most important weekends of the back-to-school-shopping season, which is the biggest time of the year for retailers after Christmas.
The negative impact on the broader economy will be short-lived, though, says Mark Zandi of Moody’s Analytics.
“It’s going to make August, which was already a very bad month, into just a terrible month. But I think September will be better. And there will be rebuilding as the insurance checks get cut and some government aid comes in. So by October, November, I don’t think we’ll see any impact in the economic data.”
But a jump in consumer spending in July to a five-month high lifted hopes that the economy can avoid a recession, which overshadowed a drop in pending home sales.
Wall Street rallied sharply as insurers are likely to see smaller bills tied to Irene. But it was the Nasdaq taking the lead with a more than 3% rally.
In Europe: Alpha Bank and EFG Eurobank, two large Greek banks, agreed to a friendly merger that creates the biggest rival in Southeastern Europe. Qatar made a sizable investment in the deal, which sparked hope of more mergers in the battered sector. Stocks were up more than 2% in Germany and France. London was closed for a holiday.
Bottom line: Stocks rallied as damage forecasts from Hurricane Irene were smaller than expected and a tie-up between two Greek banks met with investor approval on both sides of the Atlantic.