I'd consider the source...but then again this propoganda has a twist for the stability of our economic system, and for us as citizens...WOW- did I just say that? or type that?

Date:   9/9/2005 3:47:41 AM ( 19 y ago)

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U.S. Economy Believed Unlikely To Be Overwhelmed by Katrina
Congressional Budget Office projects temporary slowdown for rest of 2005



By Andrzej Zwaniecki and Bruce Odessey
Washington File Staff Writers



Washington -- The overall effects of Hurricane Katrina on the U.S. economy will be significant but not overwhelming, the Congressional Budget Office (CBO) says.

The hurricane and subsequent flooding have devastated parts of Louisiana, Mississippi, and Alabama and left thousands homeless. (See related article.)

CBO's September 6 report said the disaster could dampen by 0.5 percent to 1 percent the real, or inflation-adjusted, growth that most economists expected to be in the 3 percent to 4 percent range in the second half of 2005 and reduce employment by 400,000, according to initial estimates similar to those made by private economists. (View the full text of the report on the CBO Web site.)

But the devastation along the Gulf Coast is unlikely to push the economy far from the course of steady growth projected before the storm, CBO Director Douglas Holtz-Eakin said.

CBO's report said that the national economy will be affected by higher energy prices, which will temporarily reduce consumption and savings.

It said that although the pipelines for refined petroleum products have been largely restored, three of the eight major refineries shut down by the hurricane “may not reopen for more than a month” and “petroleum production from some oil rigs in the Gulf will be curtailed for many months.”

The release of crude oil from the U.S. Strategic Petroleum Reserve, possible delivery of more petroleum products from overseas and other measures will limit, however, the adverse effects of the supply reduction, CBO added.

The impact on the Gulf Coast economy will come from production disruptions, reduced spending, the loss of wealth and the loss of life, the report said.

Treasury Secretary John W. Snow, Commerce Secretary Carlos M. Gutierrez, Labor Secretary Elaine L. Chao and Social Security Commissioner Jo Anne B. Barnhart are scheduled to tour the devastation September 9.

At stops in Texas, Louisiana and Alabama, the president's economic team will assess the region's economic needs and discuss assistance available.

Economists say they need more data to project the effects of forecast slower U.S. growth on the global economy, which has depended partly on U.S. consumers’ appetite for imported goods.

Jean-Philippe Cotis, the Organization for Economic Cooperation and Development's chief economist, said September 6 that the macroeconomic impact “cannot yet be gauged with any confidence.”

RECOVERY AND TRADE

CBO said that global trade is likely to be affected through “any reduction in [U.S.] port activity, which may keep energy supplies and raw materials from getting to producers and consumer goods from getting to retailers.”

The report said, however, that although the Port of Southern Louisiana has been “significantly” damaged, most shipping is likely to be resumed in a few weeks or diverted to other ports.

Secretary of Agriculture Mike Johanns said that the federal government and industry were working to restore the infrastructure for export grain shipments from the Midwest down the Mississippi River during the peak harvest weeks in September-November.

"We are reassuring our international customers that we expect minimal disruptions," Johanns said in a September 7 press release.

According to the American Farm Bureau, grain exporters are busy figuring out how to ship grain out of other ports, such as Houston, if the port at New Orleans continues operating below normal capacity.

The full text of Johanns’ press release is available on the Department of Agriculture Web site.

BUDGET PROJECTIONS

The CBO report said that the federal budget will be mostly affected by congressional actions related to rescue, relief and reconstruction efforts.

President Bush asked Congress September 7 to approve his $51.8 billion emergency supplemental request to cover more costs of relief and recovery in the affected states of Louisiana, Alabama and Mississippi. Congress had already appropriated $10.5 billion in emergency assistance. Much of the emergency funding will be reflected in the 2006 fiscal year that begins October 1, Holtz-Eakin said. (See related article.)

Office of Management and Budget Director Joshua Bolten, who briefed reporters on the new request, said: “we anticipate that there will be a need for additional supplemental spending.” But Bolten refused to speculate on how much more might be needed to help the region recover.

He said that $51.8 billion should be enough “at least for the next few weeks.”

Bolten said that the federal deficit in 2006 is likely to be larger than the administration projected earlier in 2005, but he said that the administration does not anticipate that the hurricane-related spending will “undermine our efforts at deficit reduction.”

“I feel confident that we will remain on that path as long as we have continued good economic growth, … and continue to pursue spending discipline,” he said.

President Bush has vowed to halve the deficit by 2009 from the $521 billion gap in 2004.

For additional information, see Hurricane Katrina.







 

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