We can’t dismiss the difference between the economic climate in Hamburg and New Orleans. The historic boom was on the side of Hamburg, but with New Orleans, it hasn’t been relevant since 1840 when six out of one thousand Americans lived in the city. New Orleans is no longer an important city on the river as rail, truck, pipeline, and container ships became the default mode of transportation.
Economists argue that cheap housing was the only thing keeping residents from moving. Katrina destroyed more than 200,000 homes, and with no massive effort to rebuild the city, there’s a slim chance that New Orleans will fully recover.
Most cities the recovered from disaster were already growing, and the disaster was a temporary setback. In the case of New Orleans, Katrina has caused more damage in a single day than all the harm done over 45 years of slow decay.
Jobless and homeless, how would homeowners pay their mortgage? What do residents do when their credit is destroyed as well (aside from credit repair services, I suppose).
Impact on Energy Production
Katrina delivered the biggest blow to the oil and gas industry because the Gulf of Mexico is the heart of the nation’s reserve. Before Katrina, the Gulf of Mexico produced 29 percent of all domestic oil production and 47 percent of the United States 17 million barrels per day refining capacity.
By the landfall of the storm, 95 percent of the Gulf’s production already stopped. Even after ten months when oil platforms went back to power there was a 30 percent less oil production before Katrina happened.
Generally, the US economy suffered a temporary setback because of the energy production halt but other than that it is resilient.
Temporary Economic Hindrance
High energy prices and the loss of thousands of jobs made an impact on the general economy in 2005. Gross domestic product, or GDP, the total number that describes all goods and services produced in the country, declined to 1.8 percent for the last quarter of 2005 compared with a growth rate of 4.2 from the previous quarter.
The following year, however, witnessed a rapid 5.6 percent growth when the government and private enterprise began the rebuilding process. As the oil and gas industry recovered life went back to normal, and gas prices dropped under $3.
Oil and gas markets are extremely volatile, the faintest hint of a storm would make prices soar of deflating. Katrina is primarily responsible. Every oil trader think a lot about hurricane season because these storms have a long-lasting effect on the industry by and large.
The US economy recovered, but local savings and individuals didn’t. In New Orleans, the levees still need more rebuilding, and the city remains vulnerable under constant rains. Many people can’t return to their homes, and many others were displaced.