Moody’s Analytics estimates the clean-up bill for last week’s Hurricane Sandy, including infrastructure repair and replacement and assistance for affected citizens at $30 billion. We expect insurance will cover half of this, with the remainder borne both publicly and privately, leaving the federal government’s portion of the clean-up bill at approximately $10 billion. The federal budget includes $7.5 billion for the Federal Emergency Management Agency, and spending authority for additional amounts.
But in the context of approximately $3 trillion in US federal spending, these amounts are too minor to change the financial profile of the government of the United States (Aaa negative).
Past natural disasters show there are rarely any discernable or long-lasting macroeconomic implications. Nor do natural disasters diminish the US government’s capacity or willingness to service its outstanding debt.
See the full report ($) No Detrimental Effect from Sandy on US Sovereign Creditworthiness