The economic effects of Hurricane Katrina could linger for local charities and the tourism industry in Colorado, according to University of Colorado at Boulder economist Richard Wobbekind.
"I think the hurricane has the potential to impact the nonprofit communities in Colorado," said Wobbekind, director of the Business Research Division in the Leeds School of Business. "We saw a dramatic drop-off in local giving after Sept. 11 and to a lesser degree after the tsunami.
"Given the magnitude of donations we've seen already and the fact that reconstruction will be going on over a many-month period, I think the real concern at the local level is going to be: What does this giving mean in terms of providing nonprofit services to people in Colorado?"
As the extent of the damage to the Gulf Coast and its infrastructure becomes evident and the monumental task of rebuilding the area gets under way, the economic fallout from the disaster is still difficult to ascertain, according to Wobbekind. "But I don't think this is significant enough that it slows the U.S. economy enough to take the world off a continued growth path," he said.
What is known is that the destruction left behind by Hurricane Katrina will temporarily affect the supply of some products, including bananas, coffee, sugar and oil and gas.
"Some of these things you can see as supply costs, which they may be able to pass on to consumers, in which case it becomes more expensive to live," Wobbekind said. "If they can't pass the costs on, then it will squeeze the profits and create a much more uncomfortable situation for the business.
"If fuel prices do remain higher, this will affect car tourism in the state of Colorado and Colorado is a tourism state so there is some concern there," he said.
The affordability of air travel also will affect Colorado's tourist industry, he said.
"We already know the airlines are having financial difficulties and the rising fuel costs are going to put even more severe constraint on them," Wobbekind said. "So the extent that these costs get passed on to consumers as an increase in ticket prices probably would affect our ability to bring out winter tourists as well as car tourists next summer."
In the long term, Wobbekind said reconstruction in New Orleans and other Gulf Coast areas will affect the cost of building materials throughout the United States.
"We've seen prices go up steadily over the last several years for things like steel and lumber because of international growth and development," he said. "So what is that going to mean as we start seeing a lot of those resources getting absorbed by the Gulf Coast, what does that mean for the rest of the country in terms of drywall, lumber supplies, and more importantly steel supplies and other types of construction goods? At this point, there is a lot of uncertainty."
Wobbekind said higher natural gas prices will bode well for Colorado's job outlook and fiscal outlook.
"They are at levels much higher than a year ago and don't look like they're going to ease up much, because there's been damage to the delivery system of natural gas from that part of the country," he said.
While the employment numbers in Colorado are small, jobs in natural gas exploration and on the wells tend to be high paying, according to Wobbekind.
"Wells also tend to have high property taxes and mineral taxes and oftentimes when they are on private property the wells pay royalties back to the landowner. So you get secondary types of income in the form of royalties and fees. These are very important to many of the more rural counties and the state," he said.