What Impact will Katrina Have on the US Economy?

[KoKo]

Poll question: What Impact will Katrina Have on the US Economy?

Most of the hurricanes recently have seemed to only impact small local areas of the US and after the camera crews leave the devastation left is usually forgotten.

Katrina seems to be hitting such a wide area--an area that most Americans have either visted or wanted to visit as a tourist and an area where refineries supply 25-30% of our natural gas and oil refining.

Just wondering what folks here feel the impact of all of this will be.

Economic and Social Impact for US.

[bryant69]

1. It won't be good and i feel for the people that live there

But most of america will remain pretty fixated on their own navel.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[SoCalDem]

2. It will be the "new" 9-11.. a probable excuse for anything

that goes wrong or costs a ton of money or needs a taxcut

[kbm8795]

27. We'll have to invade the Cape Verde Islands

for originating these horrendous, threatening storms and attacking our citizens.

[northzax]

3. hurricanes and natural disasters are GOOD for the economy

first off, the Feds pay the tab for reconstruction, or at least give low interest loans. think of all the jobs that will be created in South Louisiana and Mississippi to fix the damage from Katrina. Over the next six months, the Federal Government will spend probably $20 billion to rebuild, that's a lot of localised jobs.

[TahitiNut]

8. Yep. Wars, crime, and disasters actually create jobs.

Despite all the Bushoilini hyperbole, the economy does not measure "good" - it's agnostic. Crime, war, and natural disasters stimulate spending and create jobs.

[ultraist]

11. Natural disasters are not good for the economy, we pay the tab

We pay the tab through increased taxes and prices. Yes, some do profit off disasters (builders, insurance corps, etc) but excessive fed spending and increased prices, do not help the economy.

http://www.agu.org/sci_soc/articles/eisvink.html

An extreme or catastrophic hurricane (Class 4 or 5) has not directly struck a major urban area since the one that hit Miami, Florida, in 1926. Yet even without such disasters, which might create losses well over $100 billion, the overall costs of natural hazards, such as extreme weather, drought, and wildfires, are estimated at $54 billion per year for the past 5 years, or approximately $1 billion per week.

Total cost estimates for natural disasters are highly speculative and depend on what financial consequences are included in the assessment, what phenomena are considered to constitute natural disasters, and the sporadic occurrence of large events such as Hurricane Andrew in 1992, the 1993 Midwest floods, and the 1994 Northridge earthquake. In addition, costs are absorbed through a spectrum of financial vehicles ranging from insurance, federal programs, and disaster relief bills to tax deductions, higher prices, and personal loss. Because of all these uncertainties, we have used the direct costs of structural replacement and repair to compare yearly totals and identify trends. Although such direct costs are less than one half the total, they appear proportional and provide a consistent measure.

In the United States, the direct costs for damage repair average about $20 billion per year, of which over $15 billion is due to earthquakes, tornadoes, hurricanes, and floods (Figure 1). The percentage of national wealth spent on homeowners' and property/casualty insurance has remained approximately constant with respect to the gross national product. Accordingly, we infer that the increase in cost is not simply the result of more insured losses being reported, but rather represents a real increase in property loss from natural hazards.

[northzax]

14. someone always pays every tab, no?

the question is, do we recieve something of value in exchange for that tab? How many times will the dollars spent on reconstruction circulate in the region, getting taxed every time? how mny jobs will be created, even in the short term?

we always pay for all construction, but the doesn't mean that construction can't be the starter to build economic growth o.

[ultraist]

16. How many are out of work? How many businesses shut down?

How much will it cost taxpayers? The few temp jobs created will not tip the scales to improve the economy.

[northzax]

19. few jobs? we're talking about rebuilding an entire state

this was the whole logic of the WPA and other public works projects, it injects money into the system. the major impact it will have on the rest of the country is to raise the cost of construction elsewhere, as the affected regions use the materials.

you're talking 75-100,000 construction jobs over the next year. and all the material. and all the transportation. Every single small business that is closed now because of damage will be rebuilt. and their customers will have money to spend.

[ultraist]

20. Few jobs, relatively speaking, They are temp jobs

Many, many businesses are shut down. Do you think they will have the oil refineries up in running in a few days? Do you realize how many people will be out of work? NO is going to lose MASSIVE TOURIST REVENUE!

We eat the costs for both those who were insured and for those who weren't.

The damage will be many, many, millions of dollars. After 9-11, the economy got much worse. This will have a similiar impact, despite the rebuilding opportunities.

WPA was a nationwide project, no comparison to this for job creation.

[northzax]

26. this is a regional problem

so a regional WPA is a legitimate comparison to make. The damage will actually be many, many BILLIONS of dollars. All of which will be respent.

The refineries will be up within 14 days. Sure, there will be a dip in tourist revenue, but tourism, in general, provides low wage jobs for many, or do maids at the Ramada make more than I think? And the tourism will return, there will be a huge boom next spring as everyone who thought they'd never see New Orleans will visit.

at a conservative estimate, 20,000 automobiles will be destroyed and need replacing, probably 500 boats, 100,000 houses will need repair, bridges, roads, airports, hotels, condo buildings... the region will buy 25,000 washers and dryers, stoves, microwaves, televisions, computers, DVD players, radios and other electronic equipment.
roofers will be busy for months. Square miles of plywood, drywall, roofing materials...millions of gallons of paint...acres of asphalt...bricks...cement blocks...timber...stone...are these magically created? or does someone, somewhere build them, then someone else sell them?

You don't think it helps your local economy when you crash your car, get your insurance check and buy a new one? sure it does. or hire some guys to rebuild your house after a fire? construction is a basis for our economy right now, all jobs are 'temp' jobs, but they're better than the current non-existing jobs, right?

[KoKo]

29. What about the "MidWest" Grain harvest...Soybeans,etc. that ship from

Ohio and Indiana down the Mississipi out of NO? What happens to them?

It's a concern for those "Foreign/International Investors..that the Agri-Business gets it's ships of Soybeans and Grain OUT OF THE GULF and out to China/Europe and the rest of the places we have "trade agreements" with...

This could be a disaster.

[northzax]

31. we shall have to wait and see

what sort of damage has been done to the Port of New Orleans...the Army Corps is really quite good at improvising, oh crap, they're in Iraq. never mind.

[LSK]

18. not if most of the money is Federal Aid

That is not putting new funds into the economy, it is just more recycling of what is there already. Maybe the only good thing is that some funds might not leave the country as fast.

But in the end, when the Govt spends, it is really not putting new money into the economy because the money has to come FROM the economy in the 1st place.

[northzax]

25. That is certainly one economic point of view

but not one that I ascribe to. The fact is that all spending comes from the economy somehow, everytime you spend a dime it's money you are taking out of one sector of the economy (your bank account) and putting it somewhere else. trace it father back, and it's money that your employer paid you, which came from somewhere else, and somewhere else before that. Fact remains that no one can borrow money at the terms Uncle Sam can get, and as long as what is bought/constructed is worth more than the cost, you get something out of it.

Look at it this way. you build a new house (and much of the current economic growth is based on construction) you are hiring a bunch of temps (architect, construction workers, excavators, electricians, roofers, drywall hangers, carpenters, plumbers, landscapers, etc.) to complets a job. They purchase all the raw materials and transform them into an added value, you hope your house is worth more than the sum of it's parts, otherwise you wouldn't do it. Every dollar you pay the contractor is touched by at least three people in the US (contrator, labourer, building supply house, teamster) That is, roughly, how wealth is created in our system. Every single one of those people spends some of that money on something else (food, rent, beer, gas, khakis, cable TV, tuition, etc.) Your contruction not only makes money for Home Depot, but also the 7-11 where the roofers buy their coffee. it's trickle UP economics. Course, you are paying 6.5% on that mortgage. in a FEMA disaster area, it's closer to 2%.

is government spending a sustainable source of all economic growth? of course not, but it can well be a kickstarter, a holdover until the rest of the economy catches up. it can be the starter in the sourdough bread, and yes, it can pay for itself over time, especially regionally.

[Deja Q]

4. See my post; so far home depot and oil companies are THRIVING.

Damn leeches.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x4496003

[mtnester]

5. The gasoline issue ALONE will be harmful. n/t

[ultraist]

6. Actually, hurricanes affect prop insurance rates nationwide

Also, spending millions of federal monies for cleanup, affects us all too, as well as increased prices in gas, lumber, etc.

[Spider Jerusalem]

7. Hello, recession....

loss of roughly 5% of total petroleum-refining capacity, maybe more, plus the loss of a couple dozen (at least) oil rigs in the Gulf...$70/bbl oil is probably here for a while. Recession seems almost inevitable (and I've seen a few economists bandying the word "stagflation"...which is not a pleasant prospect).

[newportdadde]

9. Reconstruction will temporarily boost jobs.

Gas prices are going to get even crazier.

[sandnsea]

10. It'll hurt more

Not as bad as 9/11, but it'll add to the jitters. I think it'll also increase people's anger against the money spent in Iraq, especially if very many people die and the media reports about the FEMA cuts.

[ultraist]

15. The four hurricanes in FL last year, cost taxpayers 45 billion dollars

Hurricanes are not good for the overall economy. Lost wages/salaries, interuption of production of goods/services, increased prices in utilities, insurance, gas, etc & costs to taxpayers far outweigh any temporary new jobs created for rebuilding an area.

[Dogmudgeon]

12. This will hit hard, but ...

It probably won't be bigger than 9-11 was. 9-11 was estimated to have caused <$100 billion in economic losses; Katrina will probably come in at a third of that.

I doubt that there will be much pollution-related damage, but I could be wrong about that. I know that NO isn't experiencing catastrophic flooding, although there is enough water within the levee system to cause a lot of damage.

But heads will roll over the failure of the Superdome roof, the loss of the Louisiana National Guard, the enormous cuts in the budget to FEMA/DHS for NO, and especially the fact that the people who were stranded in town were disproportionately poor, black, and destitute. (And aren't these the same people we're always worrying will go nuts and riot in the event of a crisis? So much for our classist paranoias.)

I have only one request: Please, please, PLEASE, do NOT trot out that old Desi Arnaz catchphrase again. My delicate mental health could not take another month-long siege of it. :crazy:

--p!

[Strelnikov_]

13. Who Knows? We Need To See What Has Actually Happened

Probably won't know the full extent for a few days.

[tom_paine]

17. basically, an excuse for the BushPiss (Oil) Compainies to Enron us

some more.

Stealing is now legal for them, so why not?

[KoKo]

21. Kick..........

[jayfish]

22. So Far It Looks Great!

The Dow is up 77 points. We all know how important the Dow is as an indicator of economic health for the middle and lower classes. ...right?

Jay

[KoKo]

23. It's traders making a buck on lumber, oil, pharmaceuticals and other

necessities that will be needed for recovery. It's separate from the real impact.

[Lars39]

24. The Geopolitics of Katrina, originally posted by oddtext last night:

This was emailed to me so i don't have a URL. it was an interesting enough memo to warrant posting nonetheless.

The Geopolitics of Katrina
A Category 5 hurricane, the most severe type measured, Katrina has been reported heading directly toward the city of New Orleans. This would be a human catastrophe, since New Orleans sits in a bowl below sea level. However, Katrina is not only moving on New Orleans. It also is moving on the Port of Southern Louisiana. Were it to strike directly and furiously, Katrina would not only take a massive human toll, but also an enormous geopolitical one.

The Port of Southern Louisiana is the fifth-largest port in the world in terms of tonnage, and the largest port in the United States. The only global ports larger are Singapore, Rotterdam, Shanghai and Hong Kong. It is bigger than Houston, Chiba and Nagoya, Antwerp and New York/New Jersey. It is a key link in U.S. imports and exports and critical to the global economy.

The Port of Southern Louisiana stretches up and down the Mississippi River for about 50 miles, running north and south of New Orleans from St. James to St. Charles Parish. It is the key port for the export of grains to the rest of the world -- corn, soybeans, wheat and animal feed. Midwestern farmers and global consumers depend on those exports. The United States imports crude oil, petrochemicals, steel, fertilizers and ores through the port. Fifteen percent of all U.S. exports by value go through the port. Nearly half of the exports go to Europe.

The Port of Southern Louisiana is a river port. It depends on the navigability of the Mississippi River. The Mississippi is notorious for changing its course, and in southern Louisiana -- indeed along much of its length -- levees both protect the land from its water and maintain its course and navigability. Dredging and other maintenance are constant and necessary to maintain its navigability. It is fragile.

If New Orleans is hit, the Port of Southern Louisiana, by definition, also will be hit. No one can predict the precise course of the storm or its consequences. However, if we speculate on worse-case scenarios the following consequences jump out:


The port might become in whole or part unusable if levees burst. If the damage to the river and port facilities could not be repaired within 30 days when the U.S. harvests are at their peak, the effect on global agricultural prices could be substantial.

There is a large refinery at Belle Chasse. It is the only refinery that is seriously threatened by the storm, but if it were to be inundated, 250,000 barrels per day would go off line. Moreover, the threat of environmental danger would be substantial.

About 2 percent of world crude production and roughly 25 percent of U.S.-produced crude comes from the Gulf of Mexico and already is affected by Katrina. Platforms in the path of Katrina have been evacuated but others continue pumping. If this follows normal patterns, most production will be back on line within hours or days. However, if a Category 5 hurricane (of which there have only been three others in history) has a different effect, the damage could be longer lasting. Depending on the effect on the Port of Southern Louisiana, the ability to ship could be affected.

A narrow, two-lane highway that handles approximately 10,000 vehicles a day, is used for transport of cargo and petroleum products and provides port access for thousands of employees is threatened with closure. A closure of as long as two weeks could rapidly push gasoline prices higher.

At a time when oil prices are in the mid-60-dollar range and starting to hurt, the hurricane has an obvious effect. However, it must be borne in mind that the Mississippi remains a key American shipping route, particularly for the export and import of a variety of primary commodities from grain to oil, as well as steel and rubber. Andrew Jackson fought hard to keep the British from taking New Orleans because he knew it was the main artery for U.S. trade with the world. He was right and its role has not changed since then.

This is not a prediction. We do not know the path of the storm and we cannot predict its effects. It is a warning that if a Category 5 hurricane hits the Port of Southern Louisiana and causes the damage that is merely at the outer reach of the probable, the effect on the global system will be substantial.

[KoKo]

28. An excellent read! Here's a snip of the impact this could have on US

The Port of Southern Louisiana stretches up and down the Mississippi River for about 50 miles, running north and south of New Orleans from St. James to St. Charles Parish. It is the key port for the export of grains to the rest of the world -- corn, soybeans, wheat and animal feed. Midwestern farmers and global consumers depend on those exports. The United States imports crude oil, petrochemicals, steel, fertilizers and ores through the port. Fifteen percent of all U.S. exports by value go through the port. Nearly half of the exports go to Europe.

The Port of Southern Louisiana is a river port. It depends on the navigability of the Mississippi River. The Mississippi is notorious for changing its course, and in southern Louisiana -- indeed along much of its length -- levees both protect the land from its water and maintain its course and navigability. Dredging and other maintenance are constant and necessary to maintain its navigability. It is fragile.

If New Orleans is hit, the Port of Southern Louisiana, by definition, also will be hit. No one can predict the precise course of the storm or its consequences. However, if we speculate on worse-case scenarios the following consequences jump out:


The port might become in whole or part unusable if levees burst. If the damage to the river and port facilities could not be repaired within 30 days when the U.S. harvests are at their peak, the effect on global agricultural prices could be substantial.

There is a large refinery at Belle Chasse. It is the only refinery that is seriously threatened by the storm, but if it were to be inundated, 250,000 barrels per day would go off line. Moreover, the threat of environmental danger would be substantial.

[KoKo]

30. kick