ingeneral, the outlook looks weaker than last year or the start of this year. The economy is weak in usual suspect regions and the situation does not look good in near future. But we have to see whether Obama can do some magic in his second term.
Anandvy, although difficult to predict how year 2012 will end for electronics manufacturers, I voted with a thud. Recovery signs are not vibrant and consumers are still cautious of parting with their hard earned cash.
Though i voted option B as the markets outlook still very gloomy.
@Wale, I agree things are still bit gloomy but we are seeing some recovery. I am hoping the 2012 will end "with a roar" for electronics manufacturers because uncertainity related with election will be over and holiday season might help improve companeis sales numbers.
@Bolaji I'm not sure that it will be forgotten that quickly. No storm in anyone's memory has ever come close in this area, one in which many major companies keep offices -- if not in New York itself, then often in neighboring NJ. I've seen two views of the economic impact.
One take that thought it could turn into a boon global post :
However, rebuilding after Sandy, especially in an economy with high unemployment and underused resources in the construction industry, will unleash at least $15-20 billion in new direct private spending - likely more as many folks rebuild larger than before, and the capital stock that emerges will prove more economically useful and productive.
Regarding the latter, consider a restaurant with inadequate patronage - its owner invests the insurance settlement in a new more attractive business. On the shore, older smaller homes on large plots are replaced by larger dwellings that can accommodate more families during the summer tourist season. The outer banks of North Carolina saw such gains several decades ago after rebuilding from a storm of similar scale.
All of this is not to discount the direct costs to individuals by temporary, and in some cases permanent, disruption to lives and communities, much of which cannot be quantified. However, when government authorities facilitate rebuilding quickly and effectively, the process of economic renewal, in many tangible ways, can leave communities better off than before.
Factoring in the multiplier effect of $15-20 billion spent rebuilding yields an economic benefit from reconstruction of about $27-36 billion. Add to that the gains from more a more modern and productive capital stock - likely in the range of $10 billion - and consumer and business spending that is only delayed but not permanently lost - likely in the range of $12 billion - and the total effects of natural disasters of the scale of Sandy are not as devastating two years down the road.
If electronic equipment was wiped out, and likely much was, a number of businesses that had no intention of upgrading may well be forced to buy replacements.
You see, Keynes is wrong. The $20 billion is a real loss to the economy, and in the long run it will not simply come out of insurance company profits, but be passed on throughout the economic system as higher costs-which equals less money.
Similarly, the $50 billion economic costs of the storm are real.
To take one example, if Goldman Sachs (NYSE: GS) averages $100 million every day in trading profits, then having the exchange closed for two days will reduce their fourth quarter profit by $200 million, with no chance of making that up.
This effect will also be reflected throughout the larger economy. Many New York and New Jersey businesses will go bankrupt, because the losses push them over the edge. And if the state decides to refund the costs, the additional taxes in future years will push other businesses over the edge as well.
Yes, the money spent on reconstruction is real, but it just substitutes for other money that won't get spent.
Maybe a restaurant is forced to rebuild using insurance money, and now has a larger, newer building. However, apart from the insurance premium increases discussed above, and any out-of-pocket cost to the restaurateurs, there may have been customers attracted by the old restaurant's charm, who will be repelled by the antiseptic new one.
Ariella, I know those of us on the East Coast believe Hurricane Sandy was a big deal but for the rest of the US and the world, this isn't that much. It's economic effect in local neighborhoods will be significant but countrywide, it won't be more than a blip and worldwide, not even register. Give us four months and it's all forgotten not to be remembered outside of New Jersey, New York and adjacent locations.
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