(Bloomberg) Hurricane Sandy may cause as much as $20 billion in economic damage and losses as the biggest Atlantic storm floods homes, disrupts millions of fliers, and forces retailers to close stores.

Insured losses may reach $5 billion to $10 billion, or about half of the total, according to an estimate Monday by Eqecat Inc., an Oakland, Calif.-based provider of catastrophic risk models.

Sandy spans 900 miles and is strengthening as it barrels toward landfall along the New Jersey shore in the next 12 hours. The storm may unleash life-threatening surges from Virginia to Massachusetts, reaching almost 12 feet (3.7 meters) in lower Manhattan. U.S. airlines have grounded 9,500 flights, stranding travelers, and U.S. stock trading is closed through tomorrow in the first back-to-back shutdowns for weather since 1888.

“This one has got so many facets to it -- you’ve got wind, you’ve got rain, you’ve got snow, you’ve got the full moon, you’ve got the storm surge,” said Doug Spiron, who is running home-improvement retailer Home Depot Inc.’s emergency response operations involving 350 employees in Atlanta. “Then there’s the impact of the sheer size of the storm. This one takes it to another whole level of preparation.”

Economists and analysts have varying estimates on how much damage the storm will cause, especially as it has yet to reach landfall in the U.S.

Fourth-Quarter Estimates
Hurricane Sandy ultimately may subtract 0.1 to 0.2 percentage points from U.S. gross domestic product in the fourth quarter as spending drops on services such as restaurant meals, according to Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. The economy, with annualized GDP of $13.6 trillion, expanded at a 2 percent pace in the third quarter.

“There’s a loss of activity that’s going to be hard to make up,” Vitner said. “If you’re a restaurant and you’re closed today, people are not going to eat two lunches tomorrow.”

There’s still a chance the storm will have little discernible impact on GDP, other forecasters said.

“Generally there’s a disruption effect and a rebuilding effect,” said Mike Englund, chief economist at Action Economics in Boulder, Colorado. “The disruption effect should last about a week, and the rebuilding effect the following three or four weeks. On net, the rebuilding effect exceeds the disruption effect, but only by a small amount. So we might find by the end of the fourth quarter repair would be a small positive.”

Retail Effect
Sandy may cut into sales of clothing and accessories as the holiday shopping season nears, according to Oliver Chen, an analyst at Citigroup Inc. in New York. The storm may reduce November same-store sales by as much as 3 percent as traffic may fall 40 percent in storm-affected areas in November’s first week, which accounts for about 22 percent of the month’s sales, Chen said Monday in a note.

The storm may help discount and home-improvement stores such as Home Depot as consumers stock up on supplies, while reducing purchases at specialty-apparel chains, Chen said. American Eagle Outfitters Inc., Limited Brands Inc. and Urban Outfitters Inc. are among the companies with the highest percentages of their stores affected by the storm, he said.

“The storm will disrupt last-minute Halloween sales and mall traffic but drive up stock-up trips to the discounters,” Deborah Weinswig, a Citigroup analyst, said in an email Monday. As such, she expects Sandy’s impact to be “mixed.”