The Congressional Budget Office (CBO) reported this week that Hurricane Katrina will ultimately result in 400,000 jobs lost and a slowdown in economic growth by as much as 1%.
A quarter of a million people have been evacuated from their hometowns, and they may not be able to return to their houses for weeks or even months. Now, for most of them and many others, when they return home, their jobs will no longer exist.
But there’s no need to worry, because the CBO has these reassuring words: The impact of Hurricane Katrina to the U.S. economy is “significant but not overwhelming.”
Am I the only one who finds this statement shocking and vastly short-sighted?
On an individual level, thousands are feared dead and the economic and psychological effects of the recent storm to the survivors are staggering… we’re going to see record defaults on existing debt, record levels of insolvency, poverty, hunger, and sickness — all of which cost the rest of the country big money.
On a business level, we’ve got work stoppages, production ground to a halt, higher insurance premiums, massive layoffs and cutbacks, and we’ll see bankruptcies in the thousands — all of which cut into our GDP and our country’s revenue from taxes. And this doesn’t factor in the estimated $30 billion that insurance companies will have to pay out for insured losses.
At the city and state levels, we have unprecedented bills for clean- up and rebuilding, threats of toxic water supply, mountains of missing and damaged infrastructure, and no property taxes being paid to help foot the bill.
At the federal level, in addition to the lost GDP and economic growth, we’re spending $2 billion a day on Katrina relief efforts and printing more money to keep on helping. Any hopes of meeting the year’s budget deficit target of $333 billion ($79 billion less than last year) by September 30, 2005 were washed away with the flood water.
If all that’s not overwhelming, I don’t know what is!
Senate Majority Leader Bill Frist, a Tennessee Republican is predicting that the initial recovery and relief efforts after Hurricane Katrina will likely cost between $100 billion and $200 billion.
And I haven’t even touched on the energy costs of this natural disaster…
Every time I see a newspaper or television report about New Orleans or anywhere else Katrina has devastated, first I think about the people that have been affected, and second I think of how much this nightmare is going to hurt the economy over the long term. How anyone, even a congressional body, cannot be overwhelmed by this tragedy is truly beyond me.