Tags: Experts: | Katrina | Cost | Least | $100B

Experts: Katrina to Cost at Least $100B

Thursday, 08 September 2005 12:00 AM

1. Report: Hurricane Steals 400,000 Jobs

The economy, the CBO says, is about to take a hit in the form of 400,000 jobs lost due to the storm and its long-term aftermath.

Meanwhile, the New York Times now speculates that Katrina could slow the economy's growth by a full percentage point.

Some analysts also say that the storm may result in $100 billion worth of damage to the Gulf region.

The Times also reports that the daily price tag in dealing with Katrina may induce sticker shock on Congress. That comes after administration officials told Republican lawmakers that relief efforts were running close to $700 million a day and that the total federal cost could reach the aforementioned $100 billion mark.

That would be many times the cost of any other natural disaster - surpassing even the $21 billion that was allocated to New York City after the terrorist attacks of Sept. 11, 2001.

The Times also includes a quote from a nine-page report released by the CBO to Senate Majority Leader Bill Frist's office. It illustrates how the economic impact of Katrina will be largely blunted by the fast-moving national economy.

"Last week, it appeared that larger economic impacts might occur, but despite continued uncertainty, progress in opening refineries and restarting pipelines now makes those larger impacts less likely."

The CBO report added: "While making specific estimates is fraught with uncertainty, evidence to date suggests that overall economic effects will be significant but not overwhelming."

Also unmentioned - by either the CBO or The Times - is the expected growth in construction and labor work in the region over the next year. Some economists foresee as many as 600,000 new jobs.

Liberal democrats don't want taxpayers to know it, but one of their pet projects - the National Flood Insurance Program (NFIP) - encourages people to build homes in floodplains - over and over again.

And the rest of the nation foots the bill for it.

According to a recently released report titled "Subsidizing Disaster" by the National Center for Policy Analysis, the NFIP also encourages lenders to finance mortgages for these risky homes. Today, the program covers more than 4.5 million homes in over 20,000 communities.

But because of full-disclosure mortgage and insurance requirements, most of those currently insured were aware of their area's flood problems when they purchased or developed their properties, says Christy G. Black, a research associate with the NCPA.

Yet, when NFIP pays claims for homes damaged or destroyed by floods, mudslides and other natural disasters, it does not require homeowners to relocate. They can use the money to rebuild in the same location, and their new home can also be covered by NFIP.

According to the Federal Emergency Management Agency (FEMA), repetitive claims are the most significant factor in increasing flood insurance costs. Plus:

The Government Accountability Office (GAO) reports that 90% of all natural disasters involve flooding. Although they are called "natural," many would not be nearly as destructive had people and property not been placed in harm's way, says Black:

3. Steel Costs Up 40% After Katrina

The Wall Street Journal reports that the price of steel will rise by as much as 20% in the coming months, primarily because New Orleans flooding has limited the supply and distribution of raw materials such as liquid hydrogen and scrap steel.

Reporter Paul Glader writes in The Journal that the increase would be in addition to roughly 20% price increases by steelmakers including Pittsburgh-based U.S. Steel Corp. and Nucor Corp., of Charlotte, N.C. These companies' price hikes became effective on Sept. 1 for shipments of key products like hot-rolled coil.

Liquid hydrogen is needed to make higher-quality steels (such as galvanized or cold-rolled coils) which are used in products ranging from auto panels to garage doors. Scrap steel is used to make new steel.

As buyers begin stockpiling to avoid higher prices and shortages, prices could escalate by as much as $80 a ton on such products, according to some analysts, although others forecast a more modest increase.

Currently, hot-rolled coil, which is used to make cold-rolled coil, costs about $500 a ton. The price of concrete reinforcing bar, used in construction, is also expected to rise.

"To the extent that supply becomes somewhat impacted, there could be further increases in steel prices in general as a result of Katrina. But the magnitude of those prices is yet to unfold," Mark Parr, a steel analyst at Ohio's KeyBanc Capital Markets, told the Journal.

Steel company shares are already seeing a boost.

Nucor's shares were at $57.65 on the New York Stock Exchange on September 7, up nearly 11% from $52 a share when Hurricane Katrina first hit the Gulf Coast. And U.S. Steel's share price was $43.77 a share in the same trading frame, up about 9% over the same period.

Analysts suggest some larger automakers may begin looking to ship extra supplies of steel from abroad.

Dave Elshoff, a Detroit-based spokesman for DaimlerChrysler AG, says his company is monitoring the situation, but "as of this time, all our suppliers have found alternate sources" of hydrogen.

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1. Report: Hurricane Steals 400,000 Jobs The economy, the CBO says, is about to take a hit in the form of 400,000 jobs lost due to the storm and its long-term aftermath.Meanwhile, the New York Times now speculates that Katrina could slow the economy's growth by a full...
Experts:,Katrina,Cost,Least,$100B
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2005-00-08
Thursday, 08 September 2005 12:00 AM
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