Katrina could hurt the economy more than 9/11.

Commentary about business and finance.
Sept. 1 2005 3:42 PM

The Katrina Premium

Why the hurricane may hurt the economy more than 9/11.

(Continued from Page 1)

Finally, consider the agricultural staples that are produced in huge volume in the Gulf Coast region and that are used in a wide range of products in the United States and overseas: oysters, chickens, cotton, and sugar, to name a few. Katrina will have the effect of making them more expensive and setting off a scramble among the companies that need steady supplies to find new sources. The shortages will drive up prices here and make our exports more expensive—and less competitive—abroad.

I have no doubt that markets and companies will respond to the disruptions—and respond more rapidly than we can imagine—just as they did after Sept. 11. But it will likely be a matter of months, rather than weeks, before things return to normal. Until then, the flood, which has deflated the hopes of so many, may act as an inflationary force.

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