Market Reactions to Katrina

This week, we’ll get some clues as to how broad an economic impact Hurricane Katrina had. The market will digest reports on unemployment claims, oil inventories and store sales. There’s also talk that the Federal Reserve will hold off raising interest rates. There’s no question that the Hurricane is having a major economic impact.

Unleaded gasoline now averages $2.86 a gallon nationwide, an increase of about 15 cents in less than a week, costing consumers an additional $57 million a day. That is still below the inflation-adjusted high of $3.11 a gallon reached 25 years ago, but it is getting close enough to become a significant threat to consumer spending in other areas, and not just in the United States.
Some local economies will no doubt benefit from the fact that New Orleans will be out of commission for months. Tourists who might have visited the Big Easy will go elsewhere, corporate conferences will be relocated and cities throughout the South will witness a tightening of their rental housing markets as evacuees from New Orleans reestablish their lives elsewhere.

Two other important events will be Chicago Fed President Michael Moskow’s speech on Wednesday. Also, on Thursday, Intel will provide revenues guidance for this quarter.

Posted by on September 5th, 2005 at 10:23 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.