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How can rebuilding a city/large area be considered an economic boost?
You're entirely correct.  It's one of those "broken window" fallacies.   Have you ever witnessed the anger of   the good shopkeeper, James B., when   his careless son happened to break a   square of glass? If you have been   present at such a scene, you will most   assuredly bear witness to the fact,   that every one of the spectators, were   there even thirty of them, by common   consent apparently, offered the   unfortunate owner this invariable   consolation - "It is an ill wind that   blows nobody good. Everybody must   live, and what would become of the   glaziers if panes of glass were never   broken?" Frederic Bastiat's 1850 essay, "That which is seen and that which is not seen" is still the best and most beautifully-written of such explanations.   As you point out, a gain for the construction companies is more than offset by the loss of life and financial expenditure of the insurance companies.  Plus, it is never possible to quantify the entirety of the loss in terms of opportunities foregone ("that which is not seen").  People who were about to do incredible things but now gone.  Property, of any nature, no longer of use to build on or perform service. Any replacement comes at the expense of other opportunities.