Jobless rate will spike after Katrina

WASHINGTON — The jobless rate in the hurricane-ravaged Gulf Coast is expected to spike to 25 percent or higher, and when the long rebuilding process begins it’s likely the same people the economy had left behind before the storm— the unemployed and working poor — will have the most trouble getting back on their feet.

Workers in flooded New Orleans, which faces major cleanup challenges, are taking the biggest hit, analysts said.

“There’s no question that the recovery is going to be much longer and more painful for the 28 percent of the local population in the New Orleans area living below the poverty line,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “It’s going to be much harder for the local economy to recover in the absence of resources and insurance,” she said.

In the meantime, lives and livelihoods are in limbo, analysts said.

It could take years before New Orleans is rebuilt, economists said.

“It’s just so devastating. You got to shore up the levees and get rid of the water before you can restore the necessities — electricity, water, sanitation, telecommunications. The engineering challenges faced will be gigantic,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

Rebuilding strategic oil facilities and ports will be a priority — eventually bringing people back to their jobs, Hoffman and other economists said.

But smaller Mom and Pop shops — and their workers — probably face a more precarious future. Some small businesses, restaurants and hotels probably won’t reopen, economists said. Casinos built on barges along the coast that were damaged or destroyed probably will open their hatches again. But analysts said the uprooted casino workers may seek employment elsewhere, such as Las Vegas or Atlantic City.