Katrina could hurt the economy more than 9/11.

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.

Daniel Gross is a longtime Slate contributor. His most recent book is Better, Stronger, Faster. Follow him on Twitter.

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