Speaking as the former National Accounts expert for the Parliamentary Library, Roger K is not saying something as silly as folk in this thread seem to think.
GDP is a measure of final production. So, if the US produces more as a result of spending on Katrina repair than it otherwise would if Katrina had not occurred, then Katrina will indeed increase GDP.
Now, expenditure on Katrina repair will be highly visible. What will not be visible is the production that does not occur as a result of Katrina. Nor the production which would have occurred if the resources spent on repair had been spent elsewhere. If the value of lost production plus displaced production is greater than production for repair (including any quality improvement effects), the net effect of Katrina on US GDP will be negative. Which is quite likely. Either way one certainly cannot claim that US GDP will be automatically higher as a result of Katrina. It is more likely to be below what it otherwise would be.
Of course, Katrina repair production is production, so contributes to GDP. In that (rather pointless) sense one can say that Katrina repair will raise US GDP.
Of course, if one goes directly to economic well-being, then Roger K is clearly correct, which would have been perhaps the more lay-down-misere way to put his argument.
But bright folk can say silly things, even in their area of expertise. I once heard Bernie Fraser, when Reserve Bank Governor, give a speech where he clearly confused a one-off increase in price level with inflation.
Errr
GDP is a measure of final production. So, if the US produces more as a result of spending on Katrina repair than it otherwise would if Katrina had not occurred, then Katrina will indeed increase GDP.
Now, expenditure on Katrina repair will be highly visible. What will not be visible is the production that does not occur as a result of Katrina. Nor the production which would have occurred if the resources spent on repair had been spent elsewhere. If the value of lost production plus displaced production is greater than production for repair (including any quality improvement effects), the net effect of Katrina on US GDP will be negative. Which is quite likely. Either way one certainly cannot claim that US GDP will be automatically higher as a result of Katrina. It is more likely to be below what it otherwise would be.
Of course, Katrina repair production is production, so contributes to GDP. In that (rather pointless) sense one can say that Katrina repair will raise US GDP.
Of course, if one goes directly to economic well-being, then Roger K is clearly correct, which would have been perhaps the more lay-down-misere way to put his argument.
But bright folk can say silly things, even in their area of expertise. I once heard Bernie Fraser, when Reserve Bank Governor, give a speech where he clearly confused a one-off increase in price level with inflation.