Hurricaine Katrina and the Economy

[yooperchick]

First things first, I got a C in Economics - so I am far from an expert....

With Hurricaine Katrina, how do you feel it will impact the US economy? My boss thinks it will be horrible for the economy and things will start going downhill. I guess I'm a little more hopeful that any hit the economy takes will not last long.

I have heard of a few contractors in our area thinking of going down South for the winter to help rebuild. We get a lot of snow here and usually they have little work in the winter. I'm actually not too sure what to think of the impact that will have on our local economy.

It was suggested to me that people from the South who are affected that didn't have jobs/job experience should be hired on to rebuild. That way they would earn money and job experience to go forward and rebuild their life. Interesting concept, but not sure of how that could work.

Any thoughts?

 

[Mr_Snipes]

Well I think that it will hurt the economy a little bit. Just look at the gas prices for a little while after Katrina. But now they have come down. The effects will probably be felt for a year or two with unemployment and other facts coming into play. But I think as a whole the economy will recover from Katrina without serious problems.

 

[Mirage]

That's a good point. There are going to be a lot of construction and contracting jobs opening up down there soon. I don't see that as a negative, because that will spread out the work, and give the remaining contractors (the ones who stay in their hometowns) an easier time finding projects.. Although, something that COULD happen is that they will charge more, if a lot of the workforce leaves... which could effect their local economy..

 

[dize]

I can always tell how the economy is going to be based on my job. I work in an industry that pays me very well, howevery it is grant funded. When programs start to get cut that directly affects me.

 

[MenInTights]

Effect on the economy:

1)Inflation. This hurricane did a huge ammount of damage. There is no way we can repair the region, run a few wars and keep the tax cuts. The only way we're going to be able to pay for it is to print more money. Which will be an economic boost at first, but will bite us in a few years.
2)Interest rates will stay low. The feds will be hesitate to raise rates with inflation looming.
3)Heating cost will be significantly higher espcially if we have a cold winter and deplete our natural gas reserves. 25% of natural gas comes from the gulf. That cannot be shipped over from another country. If reserves get low, there could be a big problem.
4)Housing prices will continue to rise due to shortening of natural resources and low interest rates. Fueling what will one day be a real real estate bubble.

 

[Mirage]

Wow you make some good points Spence. The heating isn't the worst problem on your list though... I think the inflation is. I don't agree with how lenient the government seems to be when it comes to making more money. It seems like it's their automatic plan B in many circumstances.

 

[yooperchick]

The heating costs will really hit us hard where I live. We get 300+ inches of snow a year and often get below zero. I am considering getting a wood stove to supplement the heat and keep our gas costs down.

 

[MenInTights]

Rita is a nightmare of a storm. Not as large as Katrina, but a lot higher wind speeds. Image the $300B rebuild for New Orleans and other $300B for Huston. Image losing the Huston refineries. Suppliers aren't able to stock the natural gas reserves with 25% of supply being down this month. Platforms in the Gulf have been vacated all month. This stuff makes your head spin.

Of course what matters most is our fellow Americans in Huston get out and that their belongings don't get damaged too bad.

 

[Mr_Snipes]

Rita is currently the 5th strongest Atlantic storm ever. The last reading was at 904mB which is just above Katrina which I think was at 902mB. This storm is going to affect the economy, maybe even more the Katrina did. We will just have to wait and see. Gas prices are already going up and it is still out to sea.

 

[Nanner]

I can't remember the exact amount but the article I read said that it costs X amount of dollars for a barrel of fuel.....the price that was being charged when the gas prices were the highest was a HUGE profit. There didn't seem to be a need at all for the gas prices to go up. Now with TX looking like it's going to be shutting down for awhile we'll see....but my guess is the gas prices were due mostly to taking advantage of a situation. My 2 cents anyway.

Also as far as interest rates. I just read yesterday that with Greenspans (I know I probably spelled that wrong) retirement coming soon he wants to raise the interest rate before he leaves. Why that is a goal it didn't say and I can't begin to guess......