White House economic adviser Ben Bernanke discusses the economic impacts of Hurricane Katrina. So long as the shocks to the energy sector are transitory, he sees only a modest negative impact in the short-run, but looking forward, he believes reconstruction will add jobs and growth to the economy:
Hurricane Katrina to have 'modest' economic impact - White House adviser, AFX: The wider US economy should see only a "modest" impact from Hurricane Katrina although the hardest-hit regions will suffer, a White House official said "Clearly it's going to affect the Gulf Coast economy quite a bit. You've had a lot of property damage. Basic services are down," Ben Bernanke, chairman of the Council of Economic Advisers, told the CNBC network "And so economic activity in that area is going to be, really reduced and that will be enough to have a noticeable or at least some impact on the aggregate data," he said … Bernanke acknowledged a "tough situation" on gasoline but said the effects should wear off. "My guess is though that as long as we find that the energy impact is only temporary, and there is no permanent damage to the infrastructure ... the effects in the overall economy will be fairly modest," he said "As long as there is not some kind of fundamental long-lasting impact on the infrastructure, which so far I don't see much indication of, I expect it will be absorbed relatively easily the way we absorbed previous natural disasters like Hurricane Ivan (last year)."
Even the worst-affected states like Louisiana and Mississippi should see some benefits in time, Bernanke added. "Reconstruction will add jobs and growth to the economy," he said