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Recession Unlikely Following Hurricane Katrina

September 8, 2005

The experts are telling us that Hurricane Katrina's impact on the economy will not send the U.S. spiraling into a recession.

A loss of 400,000 jobs will be coupled with growth falling by no more than 1 percentage point in the second half of the year, with funding for recovery and reconstruction offsetting much of that reduction in growth next year.

"Last week, it appeared that larger economic impacts might occur, but despite continued uncertainty, progress in opening refineries and restarting pipelines now makes those larger impacts less likely," said Congressional Budget Office director Douglas Holtz-Eakin in a letter to leaders of Congress.

John Silvia, Wachovia Corp.'s chief economist, said, "The background to when this hit is an economy that was doing quite well. That's a very, very different backdrop from 9/11."

And Mark Zandi, Economy.com's chief economist, said, "By this time next year, I think the effects on the macro economy will largely have faded."

The most significant threat to the economy, according to Chicago Fed president Michael Moskow, is the potential for increasing inflation. A long-term effect of Katrina is expected to be skyrocketing energy costs.

By Glenn J. Kalinoski, Executive Editor, Customer Inter@ction Solutions



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Comments to Recession Unlikely Following Hurricane Katrina

  1. RE: Recession Unlikely Following Hurricane Katrina
    Pablo :
    March 5, 2006 6:12 PM

    Well the recession will undoubtedly happen at some point. There are economic cycles and we have been experiencing an expansion for some time now. When the correction occurs then delinquencies will be on the rise and the result will be credit reports that are in need of TLC. I have found this site helpful for people who want to fix their credit problems...

    http://www.brokencredit.com


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