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Katrina, high nergy prices hit pocketbooks
(AP)
Updated: 2005-09-30 22:03

Hurricane Katrina caused $100 billion in uninsured losses in August while consumer spending plunged by the largest amount since the September 2001 terrorist attacks, the government reported Friday.


Ed Mendel, of Palm Beach, Fla., surveys a wrecked neighborhood in the Ninth Ward of New Orleans Thursday, Sept. 29, 2005. Mendel, a volunteer firefighter, brought his homemade deep water rescue vehicle to the city Wednesday after helping with rescue operations in Cameron, La., in the wake of Hurricane Rita. One month after Hurricane Katrina hit, the Ninth Ward remains partially flooded after a levy broke following both Katrina and Rita. [AP]

Because of the devastation along the Gulf Coast, personal incomes fell by 0.1 percent in August, the Commerce Department reported. Incomes would have risen by 0.2 percent had it not been for the hurricane.

In another worrisome sign for the economy, consumer spending, after adjusting for inflation, plunged by 1 percent in August, the biggest decline since September 2001, as consumers pinched by soaring gasoline prices cut back in spending in other areas.

The sharp drop in spending raises concerns about consumers' staying power in the face of soaring energy bills. Consumer spending is closely watched because it accounts for two-thirds of the economy.

Analysts said the toll from Katrina and Hurricane Rita, which struck in September, is likely to depress economic activity for several months.
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