Hurricanes impact on economy exaggerated, Congressional analysts

Theexaggerated from the twin hurricanes that hit the Gulf of Mexico coast may be less severe than first estimated, says the Congressional Budget Office.

The agency's director, Douglas Holtz-Eakin, said in a letter to congressional leaders on Thursday that hurricanes Katrina and Rita may have "more modest" economic consequences than the CBO had anticipated. The CBO estimated that their overall impact on the economy will be about one-half of a percentage point for the second half of the year, compared with as much as a percentage point as seen in a Sept. 6 analysis.

When considering private and government support for recovery and rebuilding, the storms will not affect growth in the gross domestic product over the final three months of 2005, Holtz-Eakin said, reports the AP. I.L.