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Hurricane Katrina and the Economy

24 Nov

It is almost impossible to measure the economic effects of a catastrophe such as Hurricane Katrina. Even the cost of such things as repair and clean up can be hard to gauge although some experts estimate the cost of those efforts at $105 billion.

Part of the reason why the cost of repair and clean up related to Hurricane Katrina can’t be estimated is that those efforts are still going on. Homes and other structures destroyed and damaged by Katrina are still being replaced and repaired in New Orleans.

Since it’s a well known fact that construction and repair costs increase over time because of inflation this would have to be figured into cost estimates as well. Therefore any figure you hear about the amount of damage done is simply an educated guest.

Impact on the Economy

Katrina’s impact on the economy goes far beyond simple costs. All of the income lost to individuals and businesses has to be figured in. This too is hard because much of the cost estimates will be little more than guesses.

All of the salary and benefits lost to the people who were thrown out of work by the economy has to be figured in. So does all the income lost to businesses which were forced to close by the hurricane. Since many businesses were closed for months or years this can quickly rise to a huge figure.

The long term impact is even harder to gauge because a major American city, New Orleans was simply shut down for a period of well over a year. Such an event was unprecedented in American history and its effects still haven’t been calculated.

The cost of government efforts including rescue, cleanup and moving all the displaced persons around has to be added. This can quickly run to several billion dollars and some of those costs are ongoing. Many people forced to move from New Orleans are still living in other cities and receiving government benefits.

The sorry truth is that it will probably be impossible to estimate the true cost of Hurricane Katrina. The disaster’s effects are still being felt especially in New Orleans but in other parts of the country as well. The people of Louisiana and the American taxpayer will be paying the bill for Katrina’s after effects for generations to come.

 
 

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