Hurricane Katrina will have substantial and long-term
effects on the economies of southern Louisiana and Mississippi. But, given that those two states
account for just 2% of total U.S. gross domestic product, the effects on the national economy will
be much less dramatic than the effects on the region. Since the storm, a number of economic
forecasters have adjusted their predictions to reflect its effects. Most indicate that, as a result of the
storm, national economic growth is expected to be 0.5%-1.0% slower than in the second half of
2005. However, as economic activity recovers in the affected region, and rebuilding begins, growth
in the first half of 2006 is now expected to be more rapid than was previously forecast. This report
will be updated as reliable data become available.