Source:  The New York Times, August 31, 2005.
http://travel2.nytimes.com/2005/08/31/business/31econ.html?ex=1154059200&en=5977acb690a308d3&ei=5070

             The human costs of the devastation caused by Hurricane Katrina were painfully apparent in the days following the storm.  The economic impact is also large, but less obvious.

             Because the storm destroyed many productive resources, it had the effect of shifting the Production Possibilities Curve inward.  The immediate economic cost, according to this article, was likely to be a decline in economic activity—which would show up as a decline in real gross domestic product (GDP).  Because oil and gas production was disrupted, energy prices rose in the aftermath.  This could also depress growth rates since it means rising costs for businesses and additional expenses for consumers.

             Ironically, however, the eventual rebuilding effort after a natural disaster tends to increase "measured output" according to one of the economists interviewed for the article.  ("Measured output" is another way of saying real GDP.)  The construction sector will be at the center of this rebuilding, but there will also be a surge in demand for various consumer goods to replace items lost in the flood.  Similarly, businesses will have to replace their equipment.  In the long run, the disaster could actually look good, on paper, for the regional and national economy—yet another example of one of the ways that GDP does not always accurately measure society's well-being.

• Make a list of all of the industries likely to be impacted by Hurricane Katrina.  Which industries took a hit?  Which are likely to see a boost in demand as part of the rebuilding process?