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Katrina no match for economy

The pictures of smashed casinos and damaged oil rigs send an unmistakable message: Hurricane Katrina wrought economic damage on an unprecedented scale.

In our financial markets, though, day-to-day barometers show little concern for the devastation.

The stock market has risen slightly since the storm hit. Long-term interest rates have moved slightly lower. Even oil prices, after flirting with $70 a barrel last week, fell back Tuesday to pre-Katrina levels below $66.

The markets' message is one of hope: As bad as Katrina was for residents of Louisiana and Mississippi, most of the $11 trillion U.S. economy remains in robust health...

"The economy was at a phase of the business cycle where it was relatively resilient to any type of shock," says Anirvan Banerji, research director at the Economic Cycle Research Institute in New York. "The reality is that the potency of a shock, how much influence it can have, really depends on where we are in the business cycle."...