Katrina's Economic Impact: One Year Later
Aug. 25, 2006 — -- When Hurricane Katrina devastated New Orleans and the Gulf Coast last summer, it caused immediate and significant damage not only to that region's economy but to the country's as well.
But one year later, the nation's economy has absorbed the shock from the storm and returned to growth mode. But many in the hurricane's path weren't so lucky.
"The U.S. economy rebounded from Katrina, although the region hit by the storm has not, demonstrating once again how amazingly resilient our economy can be," said Dan Laufenberg, chief economist at Ameriprise Financial.
Thousands of people lost their jobs and were forced to move to other cities. Oil production and refining operations shut down for weeks. Gasoline prices soared, along with other energy prices. Close to 2.3 million people were left without power. The port of New Orleans was damaged, disrupting the nation's shipping industry.
To gauge how the economy responded to the most devastating U.S. natural disaster on record, the ABC News business unit contacted more than a dozen economists at various organizations, such as investment banks and trade groups, by e-mail and asked them to evaluate how the U.S. economy fared in the year after Hurricane Katrina made landfall.
The 2005 hurricane season set new records as the busiest, with 28 named hurricanes and tropical storms, and most destructive, with more than $61 billion in insured losses. Hurricane Katrina caused the greatest amount of the misery.
Insured losses from Katrina alone totaled more than $40 billion, according to the Insurance Information Institute. That was nearly double the amount of damage caused by the previous record holder, Hurricane Andrew, in 1992. Andrew left a wake of destruction in South Florida that totaled more than $21 billion in insured losses in today's dollars.
More than 200,000 homes, mostly in New Orleans and the surrounding area, were destroyed by the hurricane, far surpassing any previous disaster.
"Hurricane Andrew and the San Francisco earthquake and fire, the worst previously, destroyed 25,000-30,000 homes each," said Michael Carliner, economist at the National Association of Home Builders.
Rebuilding the homes lost to Katrina has been a slow process.
"Little new construction to replace destroyed homes has occurred over the past year in the areas directly affected," said Carliner. "It will be a decade or more before replacement building is completed, and the numbers of people and homes are unlikely to return to prehurricane levels."
A study conducted by James Richardson, an economics professor at Louisiana State University, found that after Hurricane Katrina 11 percent of homes were destroyed or deemed uninhabitable in the New Orleans area alone. Throughout the state of Louisiana, nearly 18 percent of businesses were in a similar state.