As Edward suggests below, the macroeconomic effects of Katrina are just now becoming known, much less felt or sorted out.
One item that will be much more widely reported is that in addition to all of the petrochemical industry located there, New Orleans was the linchpin of the Port of South Louisiana. The port is the largest in the United States by tonnage, and the fifth largest in the world. Only Rotterdam, Singapore, Shanghai and Hong Kong are larger.
Stratfor reports, “Fifteen percent of all US exports by value go through the port. Nearly half of the exports go to Europe.” Anything from Montana to Ohio that’s sent to the world in bulk passes down the Mississippi River and past New Orleans. Virtually all of it is loaded onto oceangoing vessels at the PoSL. The port is expected to be closed for at least three months. This is a significant disruption in world trade.
The refinery outage is a serious issue. Even if they were not damaged by the storm, their staffs are probably scattered throughout the region, and not all will have survived. The refineries are also built to be run continuously and brought offline rather slowly. The rapid shutdown and long-term power outage may have done more damage than the storm itself. And they were all running flat-out before the storm to meet high demand.
The big question is consumer spending and demand. If gas prices take enough household income to cause cutbacks in other areas, what will that mean for the American economy? How sharp a drop in growth should we expect? And can the global economy run without the great engine of American consumer demand?
We may be about to find out.