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A Lingering Ill Wind For the Economy

By Sonja Ryst Hurricane Katrina could well leave a legacy of hobbled refineries, cash-strapped consumers, banished jobs, and more during the coming months. Congress is planning to spend billions of dollars cleaning up the mess. And government agencies say they are bracing for the following possibilities and estimated costs:

Real Gross Domestic Product Growth (GDP): Dampened by between a half and one percentage point (previous expectations were for 3% to 4% GDP growth).

Employment: An estimated 400,000 jobs lost nationally through the end of the year. Before the storm, expectations were for employment growth of 150,000 to 200,000 jobs a month.

Privately Insured Losses: Could exceed $30 billion

Consumption of Goods and Services: Reduced by about 0.4%, or $38 billion

Shipping: Most shipping will be able to resume in a few weeks. (Vessels drafting more than 39 feet could not use the Mississippi River at the Port of Southern Louisiana, as of Sept. 6.)

Federal Spending: Congress has approved more than $62 billion in emergency relief. The Federal Emergency Management Agency (FEMA) may spend at least several hundred million dollars more in September, from funds previously appropriated, than it would have expended otherwise.

Gulf of Mexico Oil Production: Cut by 901,726 barrels per day, or 60.12% of daily production, as of Sept. 7

Gulf of Mexico Natural Gas Production: 4.02 billion cubic feet per day of natural gas production was shut in, or 40.20% of daily natural gas production, as of Sept. 7

Refineries Expected to Be Shut Down For an Extended Period: Chevron Texaco (CVX), located in Pascagoula, Miss.; ConocoPhillips (COP), Belle Chasse, La.; ExxonMobil (XOM), Chalmette, La; and Murphy Oil (MUR), Meraux, La. These refineries represent about 5% of total U.S. refining capacity.

Sources: Congressional Budget Office; Energy Information Administration

Ryst is a reporter for BusinessWeek Online

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