Fed offers reassurance on Sandy's affect on NYC region
The Fed report, known as the "Beige Book" because of the color of its cover, is an anecdotal snapshot of U.S. economic trends, and comes out eight times a year. It's used by the Fed in its discussions about setting interest rates.
The latest report noted that consumer spending dropped sharply in New York and New Jersey after flooding and disruptions of power and travel from Sandy. But the Fed expects the holiday season and the need to replace destroyed or damaged property should subsequently spur purchases.
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In terms of retailing, "All the lost sales are expected to be made up in the weeks ahead," the report said.
Marshal Cohen, chief retail analyst for NPD Group of Port Washington, agreed with that assessment. The storm "created some pent-up demand," and retailers were aggressive in reaching out to customers, Cohen said. "Retailers pulled out all the stops to try to get the consumer to engage."
The regional real estate market slowed after the storm, the report said, and the reconstruction effort on devastated shoreline communities faces challenges of potential shortages in construction equipment and materials, and higher insurance premiums.
Mitchell Pally, chief executive of the Long Island Builders Institute, said if shortages for items like wallboard, wiring and lumber arise, they would only last two to three months. "We will get past that," he said.
Richard Guardino, Jr., dean of the Wilbur F. Breslin Center for Real Estate Studies at Hofstra University, said some of the harder-hit communities will take longer to come back than others, but residents will rebuild.
"Over the long term, waterfront properties in New York are still going to be very popular places to live," Guardino said.
The report also said a major New York City employment agency reported a sharp drop-off in business after the storm as companies shut down or operated with reduced staffs. Banks reported steady demand for commercial and residential mortgages, but delinquency rates for consumer loans increased.