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Saturday, October 01, 2005

Rose-Colored CBO Glasses

The CBO has a fairly rosy forecast of the post hurricane economy:

CBO: Hurricanes' Economic Hit Less Severe, by Andrew Taylor, AP: Cost estimates are incomplete and the data is still coming in, but it seems clear that the economic fallout from the twin hurricanes that hit the Gulf Coast may be less severe than previously feared ... The CBO estimated that the hurricanes' overall impact on the economy would be about one-half of a percentage point for the second half of the year. That compares with a CBO analysis on Sept. 6 that said the impact could be as much as a percentage point. ... When considering private and government support for recovery and rebuilding, the storms will not affect growth in the gross domestic product over the final three months of 2005, Holtz-Eakin said. In fact, economic growth "could even be somewhat higher than was projected before the hurricanes," said Holtz-Eakin, head of the nonpartisan agency that provides economic and budget data to Congress. Most of the economic losses _ as much as 1.5 percentage points _ would come in the July through September period. ... On inflation, the CBO predicted a greater impact than previously seen, almost entirely due to higher energy and gasoline prices. The consumer price index may be almost 1 percentage point higher for the period between the fourth quarter of 2004 and the fourth quarter of this year than previously expected..."But consumer price inflation should revert to pre-Katrina rates in the first half of 2006 ..." CBO said.

    Posted by on Saturday, October 1, 2005 at 01:06 AM in Economics | Permalink  TrackBack (0)  Comments (1)

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