Hurricane Katrina and Economic Implications Essay

Pages: 5 (1449 words)  ·  Bibliography Sources: 5  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics


The reconstruction of homes took up much of the state's resources and although this was a slow process, it was the state's utmost priority. Since there were no businesses left in the states, there was no prospect for employment either and this added to the despair of people. The people who were mortgage holders had no way to repay back their borrowed amounts and the bad debts and defaults of the banking sector therefore increased alongside. (Silverman)

The state encouraged the oil mine owners to resume their production process as the energy production level had fallen by massive percentages. Along with the resumption of production, it would provide the people with some employment and some income generation as well. Since in the short-term there was a shortage of supply for oil, gasoline and natural gas, the state made its efforts towards resuming that as soon as possible and got most of them started back up. The GDP level obviously fell because of no income accompanied with the higher price level. The federal government however, kept focused on spending most of its resources on the reconstruction and revival of the industries so that the economy could get rolling back and people's faith and hopes are restored. The trade routes were also reopened for the country to indulge in the exchange of commodities once again for the inflow of funds.

What did the policy makers in the country do to fix the problem?

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The policy making agencies in the country took action by lowering the interest rates to make it easier for people to start borrowing and spend on interest sensitive goods. In this way, people would start investing again on capital goods, consumer durable goods and the restructuring of their homes. It would act as the restoration of hope in the economy and give rise to borrowing financed spending.


TOPIC: Essay on Hurricane Katrina and Economic Implications Assignment

There are a few impacts that should have been considered too which were firstly of the inflation that was already existent and that would come in from the energy prices as well. Since there was a gap between the supply and the demand, the higher prices would eventually lead to inflation in the economy and the energy prices would affect the overall price level of other commodities in the market as well. Also, since there were such low interest rates being offered to the people, this would in turn increase the level of money supply in the economy creating the effect of too much money chasing too few goods which could greatly damage the economy instead of helping it back up.

It is perfectly understandable as to why the interest rates were kept low because without any money, people would not be able to make any expenditures and the flow of money in the economy would be very low. Their steps towards opening up the mines and resuming production was absolutely correct because that would solve the basic energy crisis and bring in flows of money from the trade taking place with the oil exports as well which will revive the local industries.


The displacement of people and their relocation was something to be made much more attention than it was already. That created quite a huge problem and took very long to resolve. There should have been some sort of back up and shelter where the people could go until they are resettled. The utmost priority of the people after such a disaster is to find some place to seek protection and the rest of the expenditures and necessities come later on.

However, the overall recovery system and management of the disaster was remarkable and one of the best rated by even the other countries. Usually, it takes a lot more hassle and time to get things back in order and working after a disaster like that strikes but the states of America were quite well organized and the government was quick in its assessment and application of their targets. The responses were also well targeted and dealt with without any delays and time lags apart from the policies which do take some time before transferring the effects into the economy (Labonte).


Herman, Charles. Katrina's Economic Impact: One Year Later. August 2006.

Labonte, Mac. "The Macroeconomic Effects of Hurricane Katrina." CRS Report for the Congress. 2005.

Silverman, Fran. "After Katrina,… [END OF PREVIEW] . . . READ MORE

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How to Cite "Hurricane Katrina and Economic Implications" Essay in a Bibliography:

APA Style

Hurricane Katrina and Economic Implications.  (2012, December 10).  Retrieved December 1, 2021, from

MLA Format

"Hurricane Katrina and Economic Implications."  10 December 2012.  Web.  1 December 2021. <>.

Chicago Style

"Hurricane Katrina and Economic Implications."  December 10, 2012.  Accessed December 1, 2021.