Impact of Hurricane Katrina Ripples Across Economy

摘要

Getting a handle on economic prospects in the aftermath of Hurricane Katrina poses a number of challenges. While the economy seemed to be on track at the end of the summer, the economic and human devastation of the hurricane left a cloud of uncertainty over the country. This situation is likely to play out over the next several months as analysts and observers struggle with the question as to the full ramifications of the disaster. While it will be relatively straightforward to get a handle on the direct costs of losses and reconstruction, the subtle impacts on business and consumer attitudes may prove to be much more difficult to quantify. Similarly, the weaknesses in the hazard response system and the lack of effective leadership in the aftermath is likely to create a drag on the economy that may linger long after the hard costs and construction activity have been completed. Despite this rather pessimistic outlook, the overall economy, real estate capital markets, and real estate market fundamentals appear to be on track for gradual, although somewhat delayed, improvement In the absence of additional shocks, the real estate market should begin to stabilize with prospects for improvement tied to that of the overall economy.