The most costly storm in U.S. history, Katrina devastated the economy of the Gulf Coast in Louisiana, Mississippi, and Alabama and caused massive damage to New Orleans in particular. The storm had a long-term impact on the national oil and gas industries, the region’s tourist and fishing industries, and the shipping operations of one of the country’s busiest ports.
On August 29, 2005, Hurricane Katrina made landfall southeast of New Orleans, Louisiana, cutting a swath of destruction through the city and eastward into Mississippi and Alabama. Although the city weathered the storm itself, the levees protecting it were breached, causing massive flooding. The national headlines describing the loss of life and the damage along the northern Gulf Coast and the government’s subsequent bungling of rescue and recovery operations often overshadowed accounts of the storm’s economic impact both locally and nationally.
Evacuations before and after the storm resulted in more than one million people being displaced, and for weeks businesses in the affected areas were shut down. Although encouraged to rebuild and reopen by a number of hastily passed federal and state tax incentive programs, businesses found that there was a serious shortage of available workers. The heaviest damage in New Orleans had occurred in working-class neighborhoods, making it impossible for thousands to return because their homes were destroyed by flooding. Wages went up almost immediately, as employers tried to attract the limited number of returnees, especially in construction, where thousands of new workers were needed. Additionally, financial backing for business reconstruction was both slow and erratic, as a conservative banking industry in the region and a slow response from the Small Business Administration made it difficult for owners to secure the money necessary to rebuild.
While virtually every business in the area suffered, four industries were especially affected: tourism, fishing, shipping, and energy production. Many New Orleans hotels, restaurants, and tourist attractions suffered serious damage, causing thousands of visitors to stay away and forcing a number of national conventions to relocate to other cities. The same phenomenon occurred in Mississippi, where tourism fueled by legalized gambling along the Gulf Coast was halted because casinos were either destroyed or seriously damaged. Damages to boats, piers, and processing plants caused fishing operations to come to a standstill for weeks or even months.
Because the Port of New Orleans was one of the major hubs for the import and export of goods going by sea, both domestic and foreign
Daniels, Ronald, et al., eds. On Risk and Disaster: Lessons from Hurricane Katrina. Philadelphia: University of Pennsylvania Press, 2006. Horne, Joe. Breach of Faith: Hurricane Katrina and the Near Death of a Great American City. New York: Random House, 2006.
Federal Emergency Management Agency
Fishing industry
Insurance industry
Mississippi and Missouri Rivers
Petroleum industry
Small Business Administration
Tourism industry