Costs of Katrina - short and long term

Seeing the video of New Orleans and the rest of the Gulf Coast to be devastated. I'm wondering if the damage cost for this storm will be the highest monetary cost of any natural disaster in US history. Also, what about long term? Will the consequenses of having a major US city knocked off line for months have a financial ripple effect countrywide? I think it may. I'm in commercial real estate and construction and predict material prices will shoot up in the next 4 - 6 weeks. Also, I think there will be labor shortages in the rest of the country as trades move south in anticipation of years of rebuilding. Then there are the insurance companies - not that anyone really care about them, but this has the potential to bankrupt even the largest insurers. What are some of your ideas on long term effects?

[legion]

Commercial insurers will be harder hit than residential. Keep in mind, that residential insurers only insure wind damage. All of the flooding is covered by a government program (if you have flood insurance).

This disaster could prompt another recession.

[jyl]

Bullish for: construction materials/equipment, construction labor, gasoline prices, energy companies.

Bearish for: Retailers, insurers and re-insurers, transportation.

Does it prompt the Fed to stop raising rates? My guess is not Greenspan who is focused on deflating the real estate bubble, but he's on his way out, maybe his replacement has different priorities. So potentially bullish for financials, homebuilders.

[legion]

I feel like I'm living under a rock. When was it announced that Greenspan was retiring? I just learned about it on Monday. I don't know that anyone will be able to do his job as well as he did. He's always impressed me as someone who studies thousands of leaves and can tell you all about the forest.

[likemystoppie?]

What happens when laborers can't afford to drive to work b/c gas prices are too high, and they can barely afford food. What happens then? Employers won't and can't raise wages quick enough to negate the increase in the costs of living. And how will the market bare increases in services rendered or products sold?

This is going to get a lot worse before we see a hint of it getting better....

[techweenie]

The entire country will feel this for a while. Anyone who has shopped for building supplies in the past 2 years knows the huge price increases attributed to sending building supplies to Iraq (without regard to cost). Now, there will be a fuel surcharge on top of that.

I'm completely puzzled by the lack of a highly visible national relief drive. Are we going to have 'empathy burnout' for people who choose to live where there's a once-in-a-lifetime chance of disaster?

As was mentioned before, should people abandon Seattle because seismologists say there's a near-certainty of a 9.2 magnitude quake?

[Jims5543]

Short and long term? Housing, I just heard on the local talk radio that contractors who are looking to get into the area to help (profit) from the cleanup cannot find a house to rent South of Birmingham.

I have no idea what this is going to do longterm. I can say Americans are quite rezilliant and will bounce back. We make do and do what we have to to get the job done. I would imagine the refineries are about 2 weeks from processing again.

I am sure the Army is looking into constructing floating bridges to get traffic in and out. I am disapointed in the corp for taking so long to stop the flooding but I am sure it is way more complcated that just plugging a gap. I am tapping my sand castle building experiance and I am sure it does not compare.
I just cannot help but wonder if they are overthinking it. But, what do I know.

There are probably 800K or more people looking for housing right now. I am willing to bet a lot of them want to stay in the panhandle area.
There are also a lot of businesses looking for a new building right now. (This was my dilema last year in Florida) they will be hard pressed to find anything.

Commercial rentals will skyrocket in price. (gouging?) it happened here in Florida, office space tripled in value overnight. Due to the huge demand for it. Hence the reason I purchased a house along a commercial corridor and run my business from it. It was cheaper then renting.

[speeder]

It's going to be crazy, big winners and a lot more big losers. The general economy has been going that way for a while anyways, IMO, but this will accelerate the trend big-time. Not good.

[greglepore]

Agree with Dennis. I don't think anyone can budget for the large short term increases in petro prices, whether actually caused by this or not, just as heating oil season hits the NE.

Financial services and insurance will take a bath. So will banks that lent money wildly on underinsured real estate.

Buy shrimp futures-looked like a large portion of the fleet was on the beach.

[artplumber]

Originally posted by jyl

Bearish for: Retailers, insurers and re-insurers, transportation.

Actually, at least several tv news folks suggest that the insurance industry itself thinks that this is good for the industry, as it will allow them to raise rates uninhibited for a good while and more people will want to sign up. Therefore, any short term loss will be negated very quickly.

I don't think any of us can grasp the level of destruction. 400,000 plus people out of work. All the commerce that went on in NOLA is virtually dead - for months, potentially affecting GNP. Permanent destruction of thousands of small business. Loan defaults. Much of the city's infrastructure is destroyed. Besides the obvious horrid loss of life, this one is really frightening on a national level.

[artplumber]

If the gas prices remain sustained at these levels, this will be the beginning of the next recession and the end of this real estate bubble.