They caution that at this time their figures are only “wild guesses,” but economists at Standard and Poors say that although the human tragedy of Hurricane Katrina is enormous and property damage immense, the impact of Katrina on the nation’s economy is likely to be limited.
“The near-term disruption should reduce GDP in the current quarter, but by less than many think, since most activity revives quickly after such an event and the rescue and repair activities count as additions to GDP,” said S&P chief economist David Wyss. “Although damage to ongoing production has historically been small after similar events, it may be worse in this case because of New Orleans’ reliance on tourism and the impact of Katrina on oil production and refining capacity.”
Economists Wyss and Beth Ann Bovino say that even if the disruption to oil production is temporary, third quarter real GDP could be reduced by 0.5 percentage points. Over the next four quarters, they say there is likely to be a positive impact of about 0.2 percentage points.
Based purely on my own anecdotal evidence, there seems to be great interest in the culture and je ne sais quoi of New Orleans and if/when the Big Easy is resurrected, I foresee a flood of tourist traffic.