Hurricane Katrina and its Impact on the New Orleans Economy

Introduction

The Hurricane Katrina of the 2005 had hit the countries like, Bahamas, Cuba, South Florida, Louisiana and particularly, New Orleans as it was one of the deadliest hurricanes in the history of the United States. Its greatest impact was seen in New Orleans, Louisiana with appraisals of approximately 80 % of the metropolis being wiped out and the overall amendss due to hurricane were pegged at more than $ 200 billion and 1,836 people lost their lives.

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New Orleans Economy

Though the part contributes simply 2 % of the gross domestic merchandise of the USA, it plays a critical function in the growing and development of the state as the New Orleans port is one of the busiest and largest in the universe. It is besides a Centre for the maritime industry. Another cardinal industry at New Orleans is the state ‘s one of the major beginnings for petrochemical productions with oil refinement installations. It is besides one of the major educational hubs of the state homing over 50,000 degree pupils.

Besides, tourers from world-wide common people at the pristine beaches of New Orleans with over $ 5.5 billion turnover every twelvemonth lending about 40 % of the revenue enhancement gross of New Orleans with approximately 10 million visitants. New Orleans is besides one of the 10 most visited metropoliss in the USA.

The employment scenario before the Hurricane Katrina was different in New Orleans which could be understood from the fact that from 1990 to 2000, the employment in U.S. economic system grew by 19.5 per centum making more than 21 million occupations whereas for the corresponding period, the population in the state had increased by 13 per centum i.e. , about 32 million people. However, in New Orleans metropolis lost both occupations and population in the same corresponding period. Little less than half of the population in the metropolis was employed in cordial reception, trading, medical and health care and authorities. ( Cashell & A ; Labonte, 2005 )

However, there was a displacement in form of the employment base and touristry became one of the major employers with lending 16 per centum of entire employment and authorities employment was about 20 per centum. At the same clip, the spread of mean pay between national rate and New Orleans had widened.

Export Hub

Having three chief industries in New Orleans viz. , ports, instruction and touristry which have remained anchor for the local employment. The ports at New Orleans have capacity of managing about 5,000 ships every twelvemonth from the docks of 60 states. The port of New Orleans along with the Port of South Louisiana near LaPlace histories for the maximal majority transportation in the universe. The major exports from these ports are crude oil merchandises, nutrient and grain and minerals. Whereas, the key imports are chiefly with Latin America which includes java, chocolate beans, chemicals and crude oil. ( Cashell & A ; Labonte, 2005 )

Education

New Orleans metropolis has Tulane University located in along with the University of New Orleans, Lyoyla University, Xavier University, Southern University, Dillard University and Louisiana State University Medical School. New Orleans hence, is a major hub for the degree pupils inscribing significantly of Afro-american pupils.

Post-Katrina Economic Impact

Following the lay waste toing hurricane Katrina, the loss of end product reduced the economic growing of the part in later of 2005 and resumed the economic activities in early 2006. However, the addition in passing while reconstructing the metropolis and Restoration steps had expected to increase the growing rate of the part for first two quarters of 2006 and the macroeconomic advisers changed their appraisals for the growing from 3.2 per cent each for both quarters in 2006 to 4.4 per cent and 3.8 per cent severally. ( AbcNews, n.d. ) .

Impact on Energy and Trade

For the state as a whole, its Gulf Region is a cardinal manufacturer of oil and natural gas lending 6.5 per centum and 16 per centum of ingestion of rough oil and gas severally. Due to Hurricane Katrina, the refinement of petroleum oil and crude oil loss is estimated of about 2 million barrels per twenty-four hours as the refinement capacities had to close. However, major grapevines providing petroleum and crude oil to the East, South and Midwest costs besides originate in Gulf which created impact on crude oil monetary values. Energy monetary values fluctuations in any economic system leaves big impacts on the state which has been observed in the catastrophes like wars and recessions. It leaves behind losingss and chance losingss hurdling the national growing rate indirectly. Harmonizing to surveies, mere 10 per centum of rise in oil monetary values for about three months besides can impact the cumulative growing of the economic system restricting it by about 0.7 per cent to 1.4 per cent per annum. It suggests that a little monetary value rise in the cardinal constituent like oil can hold a modest impact and crisp impact on the national economic system. Harmonizing to the Energy Department, gasolene had set a new record monetary value on September 5, 2005 at $ 3.07 per gallon. Dean Baker, economic expert and co-director at the Center for Economic and Policy Research had opined that the rise in monetary values was because of short in supply due to loss of polishing capacity decelerating the growing rate of economic system somewhat in the 4th one-fourth. “ These immediate effects had mostly dissipated by the terminal of the twelvemonth. If anything, the rebuilding from the storm ( financed by insurance and authorities aid ) was giving a modest encouragement to the economic system by the beginning of 2006, ” Dean was quoted in a intelligence study. ( AbcNews, n.d. )

The hurricane in New Orleans had forced to discontinue about 95 per cent of oil production from really 2nd twenty-four hours of the catastrophe contact. Though, the mammoth works of reconstructing and Restorations were in topographic point down to 10 months besides from the twenty-four hours of catastrophe, the annual oil production was 30 per cent less than before the Katrina.

The refineries where shut down across the part and from nine installations with capacity of polishing up to 1.5 million barrels a twenty-four hours, seven were operational by November 2005 ( Mcculey, 2007 ) . Rest of two had taken longer clip to get down. One of the refineries bring forthing 247,000 barrels a twenty-four hours could get down merely after 8 months in May.

Furthermore, 1000s of occupations were lost uniting with the crisp addition in monetary values impacting the economic growing in the last one-fourth of 2005. The state ‘s GDP had seen a crisp autumn in the growing rate at 1.8 per cent for the several one-fourth in comparing to 4.2 per cent of GDP growing for the corresponding period in the old twelvemonth.

Mesirow Financial main economic expert Diane Swonk had commented that Katrina had left distortionary impact on the economic system. After a hiking in the fuel monetary values, they were once more dipped less than $ 3 per gallon in first one-fourth of 2006 as the federal authorities along with the private endeavors had pumped in 1000000s of dollars in deliverance and Restoration enterprises. The impact of this on GDP was really positive and the growing rate was registered at 5.6 per cent in the same period. Increase in family disbursement was besides recovered in the same period with the fuel monetary values returning to normalcy.

New Orleans after Two Old ages from the Catastrophe

Harmonizing to the Time Magazine, approximately 450,000 population of New Orleans had non returned to the metropolis even after two old ages of the catastrophe after a bulk population was evacuated and some had migrated in 2005. The unemployment rate had gone up in 2007 at 5.1 per cent from 4.5 per cent in 2006 in Orleans Parish. ( Mcculey, 2007 )

The industries which had sustained the hurricane had started posting positive fiscal consequences which was a positive mark of the recovery though new endeavors were keeping from the part due to its exposure. ( Brinkley, 2006 )

The ports of New Orleans were foremost to retrieve from the catastrophe and within two hebdomads of desolation, first ship call was received at the port. Sooner, the lading traffic was in topographic point lending faster recovery as about 60,000 occupations were related to the ports and its operations in New Orleans. In 2007, approximately 500,000 riders through sail ship were estimated to get in New Orleans which was edging towards the figure of 2004 when 750,000 riders through sail had arrived at the port. ( Dolfman, Wasser, & A ; Bergman, 2007 )

Decision

Hence, the impact of Hurricane Katrina on the economic system of New Orleans has been mixed as it shrunk the growing of the part but after the reverse besides rebounded with retribution. It besides changed the landscape of employment form and flow of tourers as touristry is one of the cardinal industries here. The long permanent impact of the hurricane will stay in the heads of locals and those who lost their household and friends which could non be healed of all time and every bit much as the economic amendss can be. As the Time magazine had stated in its issue of 2007 that there were certain things in New Orleans which will ne’er be like earlier. ( Mcculey, 2007 )

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