WASHINGTON - The number of people out of work because of Hurricane Katrina has reached 279,000, and many more job losses are expected because of Hurricane Rita.
The lost jobs, coupled with surging energy prices, are expected to deliver a sharp blow to overall economic growth in the second half of this year. Also of concern is the possibility that any further unexpected spikes in energy prices could prolong the economic weakness.
The Commerce Department reported Thursday that the economy was growing at a solid 3.3 percent annual rate in the April-June period, but that rate is sure to be weaker in the just-concluding July-September quarter.
"The problem is the combined effects of the disruptions from Katrina and Rita, plus the ripple effects in the economy from higher energy prices," said Nariman Behravesh, a chief economist at Global Insight, a consulting firm in Lexington, Mass.
Before the hurricanes sent oil prices briefly higher than $70 per barrel and gasoline up to $3 per gallon, analysts had forecast that economic growth in the third quarter would show an annual rate perhaps as high as 4.5 percent.
Mr. Behravesh said he now believes growth in the gross domestic product would be closer to 3 percent in the third quarter and around 2.8 percent in the fourth quarter.
It will not just be overall growth and jobs that will be hurt. Corporate profits will take a hit as companies cope with higher fuel bills.
Mr. Behravesh and other analysts are forecasting a rebound to faster growth next year as the rebuilding gets started. They say those forecasts were based on a calming of energy prices.
But that is in doubt when it comes to natural gas, where analysts predict that parts of the country could see increases this winter of as much as 70 percent.
"Natural gas prices are going to go through the roof in the next couple of months, and that is going to hurt a lot of families," Mr. Behravesh said.
© 2018. All Rights Reserved. | Contact Us