Analysts expected significant but limited damage from Katrina
September 2, 2005
The consensus of economists on Thursday was that while the aftermath of Hurricane Katrina will slow down the growth of the US economy, although it will not be a big event economically, as a representative of Wells Capital Management put it, because oil prices have not gone as high as it was expected they might. Opinion was more varied on the topic of whether or not the Federal Reserve would pause in its series of interest rate hikes in light of the disaster. Some analysts say that rates are not likely to be raised again in the short-term, while others are of the opinion that a halt in the tightening of monetary policy would not help because capital markets do not seem to be in trouble due to the storm and its aftermath. Analysts have cut their estimates of how much the economy will grow for the rest of the year, with JP Morgan saying now that the third quarter will see growth of around 3.6 percent and that growth should be about 3.2 percent in the last quarter of the year. It had earlier said that growth in the third quarter would be at 3.9 percent. Meanwhile, officials from the oil industry are now saying that some of the refineries closed by the storm will be back up and running soon, and that some pipelines will soon be back online.