Hurricane Katrina Will Cost 1 Percent Growth to U.S. Economy

Damage caused by hurricane Katrina could cost the United States a half to one full percentage point of economic growth in the second half of the year according to data from the Congressional Budget Office, CBO.

Although the total consequences of the hurricane have still to be assessed, CBO also estimates that the loss of jobs by the end of 2005 could reach 400,000.

Douglas Holtz-Eakin, head of CBO, recalled that before the devastation of Katrina in the Gulf of Mexico the US economy, according to leading economists, was set to expand 3 to 4 percent in the second half and create somewhere between 150,000 and 200,000 new jobs per month.

“Anyhow total losses could be less than those estimated last week because the oil industry is rebounding faster than expected with most refineries and oil pipelines back in operation”, said Mr. Holtz-Eakin.

The US Energy Department estimates that Gulf of Mexico oil and gas production will be back to pre-Katrina level by November. “So far data indicates that the global economic effects of the hurricane will be significant but not overwhelming”, added the CBO director.