Hurricane Katrina Facts: Damage and Economic Effects

What Made Katrina So Devastating

woman with dog after Hurricane Katrina
Chris Graythen/Getty Images

Hurricane Katrina was a Category 5 monster that did more damage than any other natural disaster in U.S history. It was a massive storm before it even made landfall. But it did most of its damage after it hit land on August 29, 2005. That was after it was reclassified to a Category 3 hurricane.

The Facts on Hurricane Katrina's Damage

The cost of Hurricane Katrina's damage was between $96-$125 billion.

Of that, between $40-$66 billion were insured losses. Half of them were caused by flooding in New Orleans. An estimated 300,000 homes were destroyed or otherwise made uninhabitable. At least 118 million cubic yards of debris and devastation was left behind. That made clean up efforts a mind-boggling attempt.

University of North Texas Profession Bernard Weinstein put the total economic loss from Katrina to be as high as $250 billion. That's because he takes into account not just the damage, but its impact. That includes disrupted gas production and general effect on national economic growth. Katrian clobbered the nation's economic growth in 2005. Gross Domestic Product (GDP) growth was a robust 3.8% in the third quarter (July-September). That was before Katrina hit. Afterwards, it plummeted to 1.3% in the fourth quarter (October-December. That's when production losses were felt). (Source: Swiss Re, "Hurricane Katrina," January 25, 2007)

Fortunately, at that time the economy was still growing strongly. By the first quarter in 2006 GDP growth had bounced back to a robust 4.8%.(Source: BEA, National Accounts)

Why Did Katrina Damage the Economy So Much?

Hurricane Katrina affected 19% of U.S. oil production. Combined with Hurricane Rita, it destroyed 113 offshore oil and gas platforms.

They damaged 457 oil and gas pipelines and spilled nearly as much oil as the Exxon Valdez oil disaster. That caused oil prices to increase by $3 a barrel, and gas prices to nearly reach $5 a gallon. To stop the escalation in gas prices, the U.S. government released oil from its stockpile in the Strategic Petroleum Reserves. Here's how that compares to Historical Oil Prices.

Katrina's impact was so devastating because of its path. It struck the heart of Louisiana's sugar industry. That had an estimated $500 million annual crop value, according to the American Sugar Cane League. This area of Louisiana had 50 chemical plants, which produced 25% of the nation's chemicals. The nearby Mississippi coast was home to 12 casinos, which took in $1.3 billion annually.

As important as these industries are, the main damage was done to the City of New Orleans. Hurricane Katrina caused $260 million in damage to the port, although it was open to ships just a week later. The city's tourism industry created $9.6 billion annually before Katrina.

It only recently returned to attracting 7.1 million visitors each year. That's up from 2.6 million in 2006. 

Of more importance, was the impact on people and animals. More people were displaced (770,000) than during the Dust Bowl migration during the Great Depression. About 1/10 of these (75,000 people) found out upon their return that their homes had been destroyed.

The Louisiana death toll was 1,836 people. Old age was a contributing factor, since 71% of those who died were 60 years or older, while nearly half of those were more than seventy-five. Sadly, at least 68 were found in nursing homes, possibly abandoned by their caretakers. After the disaster, nearly 200 bodies were left unclaimed. Over 700 people were unaccounted for. The storm killed or made homeless 600,000 pets. (Source: HurricaneKatrinaRelief.com, Fox Facts )

How Does Katrina's Damage Compare to Other Natural Disasters?

Normally, hurricanes that hit the heavily populated East Coast cause the most damage. In 2012, Superstorm Sandy came ashore with 14-foot waves attacking Lower Manhattan, plunging the area into darkness and flooding the subway system. More than 8 million people along the Eastern Seaboard were out of power. The massive storm, although technically not a hurricane, dropped 2-3 feet of snow in West Virginia. Early estimates are that the storm will cost $20 billion in property damage, but much more in overall economic impact.

In 2011, Hurricane Irene hit New York and New England, but had slowed down dramatically after reaching landfall, and so didn't cause nearly as much damage as anticipated. Katrina was ten times more destructive than the second most expensive hurricane, Andrew, which was also a Category 5 storm when it hit Florida in 1992. It destroyed $35 billion in property, slightly more than Hurricane Ike, which was a Category 4 at its peak, and cost the U.S. economy $24.9 billion in 2008. 

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