SAN ANTONIO – The president's top economist said Sunday that hurricanes Katrina and Rita will have a modest impact on the U.S. economy.
Ben Bernanke (search), chairman of the White House Council of Economic Advisers (search), gave his assessment in a speech to the Institute of International Finance.
"So far, the effects appear to be relatively modest on growth," Bernanke said.
Many economists estimated that Katrina alone could shave as much as a percentage point off economic activity in the second half of this year.
He expressed optimism the economy would weather the double blow and that the fallout would be temporary.
That hope is consistent with the message of Federal Reserve Chairman Alan Greenspan (search) and his central bank colleagues. Last week they said that damage from Hurricane Katrina did not pose a "persistent threat" to the nation's economic health. Given that, the Fed went ahead and raised short-term interest rates to keep inflation in check.
"I remain pretty optimistic about the economy," Bernanke said.
Bernanke and private economists expect jobs to take a hit in the short term. Job losses for September could be heavy and the unemployment rate, -- now at a 4-year low of 4.9 percent, would rise.
The employment report for September is released by the government in October.
Bernanke expected the loss of "several hundred thousand jobs at least" in September.
The Congressional Budget Office (search) estimated that job losses from Katrina through the rest of the year would total around 400,000.
Bernanke said early indications after Rita suggest "that the impact on refineries and pipelines has been less than we feared. It remains to be seen if there was significant damage to the offshore drilling platforms."
He said that so far, he is optimistic that the impact on energy from the two hurricanes will be limited.