Brunt of Business Impact Yet to Come

Financial markets, department stores and many big companies on the East Coast announced plans to close Tuesday for the second day in a row. Unlike past hurricanes which blew through in a day or two, Hurricane Sandy’s fallout will be felt for much of the week, broadening the economic fallout.

Overall, total economic losses from the storm could be $10 billion to $20 billion, according to an analysis by Eqecat, a firm that performs catastrophe risk modeling for the insurance industry and government.

“We think it’s going to be big,” said Tom Larsen, senior vice president and product architect at Equecat, suggesting the toll could fall somewhere between that of Hurricane Ike in 2008 and Hurricane Irene last year.

Besides the halt in both electronic and floor trading in virtually all Wall Street financial markets Monday and Tuesday, several prominent companies also delayed scheduled announcements.

Pfizer, the big drug maker, put off its third-quarter earnings report until Thursday, while Thomson Reuters and NRG Energy delayed their reports until Friday.

Google was forced to cancel Monday’s event to unveil a new smartphone, the Nexus 4, as well as several new tablets, all aimed at the holiday shopping season. Facebook also called off an event, showcasing its new Facebook Gifts platform, that had been set to take place at F. A. O. Schwarz in Manhattan on Thursday.

Major retailers began closing New York stores on Sunday afternoon. Saks Fifth Avenue boarded up its flagship store in Manhattan, a striking image for a retailer known for its high-fashion windows.

“We have taken the necessary precautions in each store to protect our property and limit damage,” a spokeswoman, Julia Bentley, wrote in an e-mail. Saks closed stores in nine other locations from Maryland to Boston.

On Monday, about 130 of the 850 Macy’s and Bloomingdale’s stores nationwide were closed, said Jim Sluzewski, a spokesman.

“We’re not selling generators or bottled water or any of those sorts of items, so given that much of what we sell is discretionary, it’s not as big of an issue for our customers,” he said.

Oliver Chen, an analyst for Citi, wrote in a research note that he expected traffic to retailers could be down as much as 40 percent for the week in impacted areas, and November comparable-store sales could be hit by as much as 2 percent to 3 percent. However, he said, stores that sell emergency supplies, food and other staples should see an uptick in traffic and sales.

The business effects of the storm only added to the uncertainty pervading markets, economists said, with investors and executives already worried by the impending “fiscal cliff” in Washington as well as continuing economic problems in Europe and slowing growth in Asia.

For now, economists were playing down the long-term impact from the storm, even if it results in billions of dollars in property damage from the high winds and lashing rain.

In the short term, however, powerful storms disrupt consumer spending and can cause sharp month-to-month swings in economic data, said Christopher D. Carroll, an economics professor at Johns Hopkins University who has analyzed the impact of weather events for the Federal Reserve.

“It is something that serious analysts pay attention to, and you can find evidence that it does have an impact on the monthly data,” Mr. Carroll said.

Eventually, most spending or other activity is simply pushed forward, a phenomenon known in economics as intertemporal substitution. For example, since the New York Stock Exchange is closed on Monday and, as seems likely, on Tuesday, volume will probably rise on Wednesday and Thursday when trading resumes.

The most powerful hurricanes that come along once or twice a decade — like Katrina or Andrew — can actually boost economic growth in the short-term, since the value of what is rebuilt is often more than that is replaced.

“It’s a problematic aspect of economics,” said Mr. Carroll. “If there’s a lot of damage and stuff gets destroyed, like in Katrina, that doesn’t show up in the calculation of gross domestic product. However, the rebuilt house does.”