November 26, 2012
Strong Economic Recovery Continues After Superstorm Sandy
Black Friday Sales Increase 12.8%
Mineola, NY- An increase in spending during “Black Friday Weekend” continued the accelerating consumer spending trends observed since Superstorm Sandy, Nassau County Comptroller George Maragos said today. This increased spending should go a long way in recovering lost economic activity and sales tax revenues during the two weeks following the storm due to the widespread devastation and extended power outages. Comptroller Maragos had earlier warned that Superstorm Sandy, in combination with the subsequent Nor’easter, may have caused over $1 Billion economic losses to Nassau County, with a potential short term loss of sales tax revenue of approximately $30 million during the first two weeks following the storm.
“It now appears that the recovery and re-building is already in full force with the rapid financial infusion from insurance companies, FEMA’s assistance to our communities, and the surprisingly strong 12.8% increase in holiday sales as reported by the National Retail Federation,” Comptroller Maragos said. “Accordingly, the negative $30 million sales tax impact projected during the two weeks following the storm may be mitigated to approximately $10 million or less during the entire fourth quarter, with full recovery expected in 2013.”
Utilizing the experience from Hurricane Katrina for guidance on the comparative economic damage and recovery econometrics, including the local factors, the Comptroller’s Office has revised its economic forecast for the impact of the storm. Louisiana experienced a 26% decrease in sales tax revenue in the third quarter of 2005 compared to the prior year as a result of Katrina, but bounced back in the fourth quarter by approximately 20% over the prior year’s fourth quarter and was up by approximately 27% for the full 2006 year over the prior year.
It is unlikely that Long Island will have the same magnitude of sales tax recovery as was experienced in Louisiana after Katrina due to the comparably lesser impact in Nassau County from Sandy, the lower current GCP (Gross County Product) growth rate and the greater economic uncertainty in 2013 from the fiscal policies from Washington. At this point, we can estimate conservatively that the County should be able to bounce back and should eventually exceed lost sales taxes revenues by $5-$10 million, for an overall pick-up of approximately 1% to 1.5% over budget during the 2013 fiscal year.