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Blackout 'bill' $30bn a day
17/08/2003
21:31 - (SA)
Washington - The bill to the US economy for the largest
power outages in the country's history could run up to $30bn a
day, economists estimated on Friday.
Car assembly lines remain idle and utility plants remained
off line on Friday, one day after a massive power failure
struck large swaths of the eastern US and Canada.
"Maximum impact under this scenario, in our view, is
approximately $25bn to $30bn a day in terms of lost gross
domestic product," said Merrill Lynch chief US economist David
Rosenburg.
Economists said, however, that the long-term damage to the
economy should not be too crippling.
Although many businesses told employees not to report for
work on Friday in the affected areas, the New York Stock
Exchange - in a show of confidence - opened for business as
usual, and the treasury department had received no reports of
disruption to the banking system.
"The bottom line, in our view, is that when a quarter of
the country is shut down, which we are practically at risk of
doing, it basically shaves off roughly one percent from gross
domestic product growth at an annual rate," Rosenburg said.
Merrill Lynch said that, as a result, US third-quarter
growth could now moderate to 3%.
Emergency plans
Emergency plans put in place for the feared millennium
computer glitch and following the September 11, 2001 attacks
are expected to help speed the mighty US economy back into its
pre-outage gear.
"To be sure, there are some costs - people lost food, ice
cream, and then some information was probably lost, and today
New York City's not really working, some output has been lost
- but I think most of it can be made up," said Sung Won Sohn,
chief economist at Wells Fargo Banks in Minneapolis.
The biggest impact was expected to be on the nation's
industrial production.
Many of Detroit's car plants were idling as utilities
scramble to restore power on Friday, internet access was also
down in many offices and many trains and subways in New York
were not running.
Economic statistics
"The blackout will eventually affect many US economic
statistics, including industrial production, retail sales
(and) manufacturing output," said Dana Saporta, an economist
at Stone and McCarthy in New Jersey.
On the New York Stock Exchange, which processes more than
1.3 billion share deals on an average day, trading was light
and volatile.
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