The city of New York is, even as I write, battering down for what it expects to be one of the worst blizzards in the history of the city. As Charlie Baker, governor of Massachusetts, put it it in the New York Times, “this is a top-five historic storm, and we should treat it as such.” Subways are shutting down, roads are banned, flights are being held, businesses are closing their doors, and schools are out – at least for a day or so. New York City is by far and away the most populated metropolis in the United States, and is home to much of the nation’s corporate activity on top of being one of the world’s leading financial centers. So it seems reasonable enough to pose the question: how big of an impact will New York effectively shutting down have on the nation’s economy, even if just for a day?
Being the preeminent center of American industry that it is, most would suspect that New York accounts for a significant chunk of the United States economy, but many might be surprised at just how disproportionately large that chunk is – I know I certainly was. As Alexandr Trubetskoy demonstrated in The Week Magazine (a link to his data is available in the article, in spreadsheet form), the greater New York metropolitan area accounted for a whopping 8.52% of the United States GDP in 2013. According to the Bureau of Economic Activity, US GDP in 2013 was 16,768.1 billion dollars (link leads to excel file). Going off of Trubetskoy’s estimate, New York was responsible for roughly 1428.64 billion dollars worth of economic activity in that year. If we multiply this by 1/365, we get 3.914 billion dollars. This is merely a back-of-the-napkin estimate, but it is still nothing to bat an eye at. New York shutting down for a single day could cause a loss of ~3.9 billion dollars of economic activity, or .023% of the nation’s GDP (using 2013’s numbers). When dealing with such massive numbers as the United States GDP, even that mere fraction of a percentage is something that will be sorely missed. And that is if we assume that New York is the only area affected – which it isn’t. As reported by MSNBC, five northeastern states have declared states of emergencies, two of which are homes to cities (Boston and Philadelphia) which are amongst the top ten contributors to US economic activity. As corporate headquarters lose a day of work and traveling workers are halted in their tracks by the freeze (no pun intended) on flights, the impact of the storm could reach well beyond the northeast. Power outages and the costs to the government of emergency services and road workers will only lengthen the strain on the local economies.