NEW YORK (Reuters) - President Barack Obama consoled grieving victims of Superstorm Sandy on the ground and surveyed disaster zones from the air on Thursday, visiting parts of New York City still struggling to recover 17 days after the storm devastated the U.S. Northeast.

Wearing a wind breaker and sturdy shoes, the president walked through destroyed sections of the borough of Staten Island, hugging and chatting with people whose lives were shattered when Sandy slammed ashore on October 29, bringing a record storm surge and killing more than 120 people.

Among those he consoled were Glenda and Damien Moore, the Staten Island parents of 4-year-old Connor and 2-year-old Brandon, two boys who died after being torn from their mother's arms by raging floodwaters.

At the request of the Moores, Obama also praised New York police Lieutenant Kevin Gallagher, who stayed with the Moore family to help them through that tragic night.

"That's not in the job description of Lieutenant Gallagher. He did that because that's what so many of our first responders do. They go above and beyond the call of duty to respond to people in need," Obama told reporters.

"That spirit and sense of togetherness and looking out for one another is what is going to carry us through this tragedy. It's not going to be easy," he said before returning to Washington aboard Air Force One.

It was Obama's first trip to New York since the storm and his November 6 re-election. The trip came as he confronted other pressing issues such as the "fiscal cliff" of looming automatic tax hikes and spending cuts that could stunt economic growth, unrest in the Middle East, and the fallout from the resignation of his CIA director.

The gigantic storm caused an estimated $50 billion in damage as it inundated lower Manhattan with seawater, rearranged the New Jersey shore and Long Island, and tore up neighborhoods in far-flung areas of New York City's outer boroughs.

At least 22 people died in Staten Island, a Republican-leaning enclave that nonetheless voted for Obama 50 percent to 49 percent over challenger Mitt Romney.

Obama announced he was appointing Housing and Urban Development Secretary Shaun Donovan, a New Yorker, as the federal government's "point person" to oversee storm recovery.

He left unanswered exactly how to pay for the damage.

New York Governor Andrew Cuomo estimated the storm caused $50 billion in damage and economic losses, more than $30 billion of that in New York state alone.

FEMA is due to reimburse some victims and local governments for damage but has only about $8.1 billion available, meaning Congress may have to appropriate more money at a time when much of the talk is of fiscal restraint in Washington.

The storm also caused a surge in new claims for U.S. jobless benefits last week and weighed on factory activity in November, providing early signs of how heavily Sandy could hit the U.S. economy in the fourth quarter.

SURVEY FROM THE SKY

After arriving at New York's John F. Kennedy airport, the president and other officials boarded a helicopter and flew over storm-ravaged neighborhoods including the Rockaways, Breezy Point and Coney Island before landing in Staten Island.

With power generators roaring in the background in a part of Staten Island still lacking power, Obama entered a white, disaster recovery tent run by the Federal Emergency Management Agency (FEMA), greeting people in line.

At a Small Business Administration tent where business owners apply for low-interest loans, Obama chatted with one woman and hugged another, staying with her for several minutes and posing for photographs.

"Thank you guys for the great work," he told workers, noting that volunteers had come from around the country. "Dallas. San Juan. We got the whole country represented here." To a group of FEMA volunteers, he said, "Proud of you guys."

Joining him were Donovan, Cuomo, Mayor Michael Bloomberg, Department of Homeland Security Secretary Janet Napolitano, and both New York U.S. senators, Charles Schumer and Kirsten Gillibrand.

Disaster victims are increasingly frustrated at the lack of electricity, shortages of gasoline and bureaucratic obstacles to recovery.

"It's nice that the president has come, but he is not seeing half the devastation that hit this community two weeks ago," said Lianne Aponte, 25, a few blocks from where Obama spoke. "It's all too little too late, you know. We needed our president here when this first happened, when we were freezing at night and the neighborhood was flooded."

She and her husband, Alex Bogomolmik, 31, said they had to swim to their car as a 10-foot (3-metre) wave barreled toward their home. "Thirty more seconds and we wouldn't have made it to the car. We would have drowned," Bogomolmik said.

Before Obama arrived, a small army of federal, state and local law enforcement walked mud-caked streets as vehicles hauled away debris. Construction crews fixed cracked streets and weary neighbors worked with volunteers to fill dumpsters full of water-logged furniture and broken shards of sheet rock.

On Roma Avenue, Peter Testagrossa, 72, a retired concrete contractor, sighed as he trudged through the blown-out remnants of his two-family home, which he shares with his daughter Angela and her four kids. Everything below waist level was destroyed.

"Look at the beautiful bathroom I built for my wife, with my own hands," he said, gesturing towards a storm-damaged mess. "I got in a terrible fight with my daughter this morning. She wants to rebuild. But I don't want to. I love this house. I built everything in this house."