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Katrina economic effect likely to top $100 billion
06 set 2005
Katrina economic effect likely to top $100 billion

05:41 PM CDT on Tuesday, September 6, 2005

By JEANNINE AVERSA / AP Economics Writer

The economic hit from Hurricane Katrina keeps growing, with experts now saying it's likely to top $100 billion and could go much higher.

And while the epicenter of the damage is on the Gulf Coast, consumers around the country -- already dealing with record-high gas prices -- also may end up paying more for everything from lumber to coffee because of disruptions wrought by the storm.

The government has yet to put an overall price tag on Katrina, but there is general agreement the hurricane will be the most expensive natural disaster in U.S. history.

Paul Getman, chief executive officer of, estimates the economic loss from the hurricane that devastated New Orleans and a swath of communities along the Gulf Coast will total around $175 billion.

Most of that -- $100 billion -- is damage to homes, businesses, roads, bridges, levees, telecommunications, water and sewer systems and other public infrastructure, he said. Another $25 billion is the cost of disrupted economic activity. Larger energy bills faced by consumers and businesses make up the other $50 billion.

Risk Management Solutions of Newark, Calif., which specializes in estimating potential losses from natural disasters and terrorist attacks, estimates the economic loss from Katrina could exceed $100 billion in terms of property and infrastructure damage and business interruptions, marketing director Shannon McKay said.

Fallout from the hurricane will slow economic activity for the country as a whole in the months ahead anywhere from one-half percentage point to a full percentage point, economists said. That's because elevated prices for energy and other goods are expected to damp spending by consumers and investment and hiring by businesses, analysts said.

The storm's economic impact is being felt by consumers and businesses around the country because the Gulf Coast region is an essential hub for oil and gas production and distribution. The area also is home to vital shipping and transportation links that allow grain and other goods to flow out of the country and coffee and other cargo to flow in.

Oil facilities were knocked out. Ports, roads and railways were crippled. Businesses were shut down.

For consumers, the fallout means higher prices not only for gasoline, which has soared over $3 a gallon, but potentially for a variety of other goods as well, analysts said.

"Consumers are likely to pay more for lumber, coffee, chocolate, perhaps sugar -- anything that we import through the ports in the affected region will face higher prices," said Mark Zandi, chief economist at

More expensive fuel costs to transport all kinds of goods also are likely to show up in higher prices charged to consumers. "Almost every good that sits on store shelves might see an increase in price related to Katrina," Zandi predicted.

As business costs go up, manufacturers are likely to pass more of those increased costs for energy and other materials to customers and ultimately to consumers in the form of higher prices, said Clifford Waldman, economist at Manufacturers Alliance/MAPI, a research group. Factories, he noted, are big users of natural gas.

"I think businesses will be more inclined to pass through more of their energy cost increases to consumers because they don't view the situation as temporary. It is really eating into their profits now and they really need to pass through more costs to consumers," predicted Paul Kasriel, chief economist at The Northern Trust Co.

Prices for paper products, detergents, asphalt, roofing shingles and other materials with heavy petroleum or natural gas components to them also are likely to rise, economists said.

Lumber prices have mostly jumped in response to an expected surge in demand related to Katrina rebuilding, said Ken Simonson, chief economist for The Associated General Contractors of America. Prices for cement and rubber -- goods that flowed into the country through the now ravaged Port of New Orleans -- also are likely to rise, he said.

"Consumers who are doing repairs or additions to their home will notice the effect when they buy a bag of cement," Simonson said.

In the aftermath of the hurricane, is now estimating that consumer prices in the second half of this year will increase by 3.2 percent on an annualized basis. That's up from a pre-hurricane estimate of a 2.5 percent increase.

The National Association of Manufacturers, meanwhile, is surveying members to get a handle on supply disruptions and other economic fallout related to Katrina, said David Huether, the association's chief economist.
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Re: Katrina economic effect likely to top $100 billion
07 set 2005
se suposa que tots sabem anglès??
segurament el tetx està molt bé però podria estar traduit