Macroeconomic effects of Hurricane Katrina Essay

Macro frugal effects of Hurricane Katrina - Essay ExampleReconstruction activities be expected to restore the level of gross domestic product to what it was before Katrina. Loss of wealth and capital due to Katrina would non influence GDP. GDP is a measure of current activities, not a measure of nations wealth. GDP would not capture the economic impact nor the devastating expiry of life and dislocation associated with Katrina (Reed 4).4. Katrinas Effect on the frugal GrowthW strivee house economic advisor said in August 31, 2005 Hurricane Katrina is likely to ache only a modest impact on the U.S. economy as long as the hit to the energy sector proves transitory.3 Congressional Budget Office (CBO) expected Katrina to dampen national (inflation-adjusted) economic growth rate by 0.5 to 1 percent only and reduce employment by some 400,000 in the second half of 2005. CBO anticipated that economic growth and employment are likely to bait during the first half of 2006 as rebuilding a ccelerates (First 3). The following table summarizes the forecast projections (Reed 3). Table 1 Estimated effect of Hurricane Katrina on Economic Growth.45. Katrinas Effect on the Labor ForceKatrina done for(p) the infrastructure of most businesses in the Gulf margin. Workers homes were also destroyed and the labor trace decreased substantially in the Coast as people evacuated the area. When reconstruction efforts started pumping money into the region, new jobs started to surface. It would still take time to regain the labor force that existed in the Gulf Coast prior to Katrina. Job losses in the Gulf Coast would dissemble growth in jobs across the nation (Reed 6). 6. Katrinas Effect on the Consumer Prices and InflationIt is expected that on the diddle run, consumer prices will rise due to rise in energy prices.... This essay is one of the best examples of abridgment of the destructive impacts of Hurricane Katrina on the American economy. Katrina caused the dislocation of man y people, who would need housing, access to health care, education for their children, and factor to meet their basic needs.Destruction of bridges, highways, residential and business property represent a permanent loss in national wealth and capital. Congress has appropriated $62 billion for Katrina relief activities, which would increase budget deficit. Katrina destroyed the infrastructure of most businesses in the Gulf Coast.Evacuation of the Gulf coast reduced economic activities in the region in the short term, which decreased GDP. Resources that would have been used for investment and spending are presently to be used rebuilding. Reconstruction activities generate jobs and income which adds to the GDP. Reconstruction activities are expected to restore the level of GDP to what it was before Katrina. When reconstruction efforts started, new jobs surfaced.Most economic activities came to a halt as a declaration of the devastation of Katrina. New Orleans flood accounts for almos t half of the total property damage. Investment in rebuilding the Gulf Coast would allow dislocated inhabitants to return home. Reconstruction activities in the Gulf Coast would help cushion the macroeconomic effect of Katrina. Replacing and rebuilding the capital lost would enable the southerly states of Mississippi and Louisiana to regain their abilities to provide their share in national growth.