A new Rutgers University report on the economic impact of Hurricane Sandy on New Jersey predicts that New Jersey's economy will rebound, but only if restoration expenditures of approximately $25 billion are made.
Failure to make the expenditures will leave the state economy “significantly damaged,” the study found.
It predicts that the net economic and fiscal effects will be modest, but "that result is critically dependent on the full resources needed for recovery being made available. Without those resources, the authors estimate that the damages to the state’s economy will be significant.
"Based on estimated initial economic losses (not including damages to physical structures) of approximately $11.7 billion in state gross domestic product (state GDP), and total recovery and reconstruction expenditures of approximately $25.1 billion through 2015, the analysis finds that, following heavy losses in state GDP, employment, and income in the fourth quarter of 2012, the state economy will rebound significantly, with economic activity exceeding the baseline forecast (i.e., without the storm) for 2013-2015," the report states.
The estimate depends upon the restoration expenditures actually being made. If the funds for these restoration and recovery expenditures are not made available, the offsetting positive impacts to the economy will not occur and the New Jersey economy will be significantly damaged, it concludes.
Only if the state obtains the resources needed to fund the offsetting recovery and reconstruction expenditures will the substantial negative economic and fiscal impacts of the storm be neutralized over time.
“The Economic and Fiscal Impact of Hurricane Sandy in New Jersey,” was authored by Rutgers University economist Nancy Mantell, director of the Rutgers Economic Advisory Service (R/ECON); Joseph J. Seneca, university professor and economist at the Edward J. Bloustein School of Planning and Public Policy; Michael Lahr, associate research professor at the Bloustein School’s Center for Urban Policy Research; and Will Irving, Bloustein School research associate.
The authors use the R/ECON model of the economy consisting of more than 250 equations and 30 business sectors to estimate the effects of the storm on state gross domestic product, employment, income, and state taxes.
Read the full report at http://policy.rutgers.edu/reports/rrr/RRR34jan13.pdf.
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