WASHINGTON, D.C. — The jobless rate in the hurricane-ravaged Gulf Coast
is expected to spike to 25 percent or higher, and when the long
rebuilding process begins it's likely the same people the economy had
left behind before the storm - the unemployed and working poor - will
have the most trouble getting back on their feet.
ERIC GAY/AP
Shannon and Steven Grannon take what belongings they can from
their Waveland, Miss. home on Friday.
|
Workers in flooded New Orleans, which faces major cleanup challenges,
are taking the biggest hit.
"There's no question that the recovery is going to be much longer and
more painful for the 28 percent of the local population in the New
Orleans area living below the poverty line," said Liz Ann Sonders, chief
investment strategist at Charles Schwab. "It's going to be much harder
for the local economy to recover in the absence of resources and
insurance."
Lives and livelihoods are in limbo, perhaps for a long time since it
could take years to rebuild the city.
"It's just so devastating. You got to shore up the levees and get rid of
the water before you can restore the necessities - electricity, water,
sanitation, telecommunications. The engineering challenges faced will be
gigantic," said Stuart Hoffman, chief economist at PNC Financial
Services Group.
Rebuilding strategic oil facilities and ports will be a priority -
eventually bringing people back to their jobs, Hoffman said.
But smaller Mom and Pop shops - and their workers - probably face a more
precarious future. Some small businesses, restaurants and hotels likely
won't reopen. Casinos built on barges along the coast that were damaged
or destroyed probably will resume operations, though some uprooted
casino workers may seek employment elsewhere, such as Las Vegas or
Atlantic City.
"The populations in Louisiana and Mississippi are incredibly poor. Most
of the damage was from flooding, which doesn't tend to be covered by
insurance. That combination adds up to an incredibly long and painful
rebuilding process- I think five to 10 years," said Mark Vitner, senior
economist at Wachovia.
Mississippi last year ranked the lowest among all 50 states in terms of
per capita income, $24,650, according to the Commerce Department's
Bureau of Economic Analysis. Louisiana was ranked No. 42, with per
capita income of $27,581. Alabama placed 40th, with per capita income of
$27,795. The nationwide per capita income last year was $32,937.
Poverty rates for the three states also are higher than the national
average.
It's too early for any hard numbers on how many people have lost their
jobs because of the hurricane.
Phil Hopkins, managing director of U.S. regional services for Global
Insight, estimates at last a half-million people, while Rajeev Dhawan,
director of the economic forecasting project at Georgia State
University, said it may be 1 million.
The situation probably will propel area unemployment rates into double
digits in coming months, even when accounting for employment gains from
rebuilding efforts, Hopkins said.
The seasonally adjusted unemployment rate in the area of New Orleans,
Metairie and Kenner was 4.9 percent in July, Hopkins said, based on his
calculations. He said the jobless rate there could easily climb to 25
percent.
In the storm-slammed area of Gulfport and Biloxi, Miss., the seasonally
adjusted unemployment rate in July was 5.7 percent, Hopkins said. That
rate could rise to around 20 percent or higher, he added.
"It's a pretty sizable impact. Commerce has come to a standstill in
those counties that were hit," Hopkins said.
The unemployment rate for the United States as a whole was 5 percent in
July.
To help ease the economic pain, the Department of Labor announced Friday
that it is providing an emergency grant of up to $50 million to create
10,000 temporary cleanup and recovery jobs for displaced workers in
Mississippi.
Though the affected communities account for a small slice of the United
States' overall economic activity, the storm's economic impact is being
felt by consumers and businesses around the country because the Gulf
Coast region is an essential hub for oil and gas production and
distribution. The area also is home to vital shipping and transportation
links that allow grain and other goods to flow out of the country and
coffee, bananas and other cargo to flow in.
The powerful and deadly Katrina - likely to be the costliest natural
disaster in U.S. history - has knocked out oil refineries, shuttered
businesses and crippled the flow of commerce through ravaged ports,
roads and railways.
On Capitol Hill, lawmakers are talking about ways to help out local
economies. That includes the possibility of loans, loan guarantees or
direct assistance to state and local governments in Mississippi,
Louisiana and Alabama, said House Majority Whip Roy Blunt, R-Mo.
"We also need to be looking at the long-term economic impact not just to
the states affected, but to the economy of the entire region," Blunt
said.
