Posted on 16 Jan 2013 by Neilson
New Jersey could experience a "modest" positive economic impact from superstorm Sandy even when factoring in heavy losses in employment and consumer spending after the Oct. 29 storm, according to a study released Monday.
The storm won't entirely erase the losses in spending and damage to infrastructure from Sandy, but new expenditures on construction and the replacement of lost items will provide stimulus to the economy in the next three years, the analysis by three Rutgers University economists found.
"Next year will be a better year for the state's economy, assuming the rebuilding expenditure occurs," said Joseph Seneca, a professor at Rutgers' Edward J. Bloustein School of Planning and Public Policy, who co-wrote the report.
The boost, however, is dependent on New Jersey getting reimbursement for the rebuilding from the Federal Emergency Management Agency, along with insurance payments to homeowners and public entities.
Congress is slated to take up a $50 billion Sandy aid package on Tuesday, but some Republicans have characterized the bill as laden with unwarranted "pork" expenditures and have pushed back on the spending.
If the federal government doesn't come through and the rebuilding is stalled, the state could suffer big losses, including 19,300 jobs, $138 million in tax revenue and more than $15 billion in state gross domestic product through 2015, the report found.
"The critical thing is that the restoration expenditures become real and that they are spent to repair those capital losses," Mr. Seneca said.
In the study, Rutgers researchers applied 250 economic equations -- such those looking at consumer and business spending -- across 30 business sectors to take a broad view of New Jersey's fiscal picture in the last three months of 2012 until 2015, when the recovery is supposed to wind down. The analysis assumed $25 billion in recovery spending through the federal government and insurance carriers.
The state lost 4,200 jobs in the last three months of 2012, for example. But the model found that New Jersey could gain 12,500 positions through 2015, the majority of them in 2014. Construction, real estate and finance will see some of the biggest increases, according to researchers.
While the state lost more than $7 billion in GDP in the last quarter of 2012, economic activity is expected to grow faster than it otherwise would have through 2015 as money is spent on reconstruction. A more modest increase of tax revenues is also predicted through 2015.