WASHINGTON — Concerns grew Thursday that Hurricane Katrina could have wide-reaching effects on the nation's economy, causing record gasoline prices to surge even higher, key agricultural crops to rot in Midwestern fields and warehouses, and some of the nation's troubled airlines to collapse.
As estimates of the economic damage mounted, Federal Reserve Chairman Alan Greenspan came under increasing pressure to scrap or delay further Fed interest rate increases. In a hastily arranged White House meeting, President Bush summoned the Fed chief to discuss what could be done to lessen the hurricane's economic toll.
Details of the meeting were not disclosed, but many experts predicted that Greenspan would work to avoid a possible economic slowdown.
Experts warned that gasoline prices -- driven higher because of storm-related damage to the Gulf Coast's energy infrastructure -- were the greatest concern and might be approaching levels that would soon ripple through the economy.
If that happens, prices of basic items could soar, pushing up inflation. The Gulf Coast accounts for about 20% of the nation's oil and natural gas supplies.
High gasoline costs -- and accusations of gouging amid prices as high as $5 a gallon -- also appeared to be fueling a consumer backlash. But the Bush administration took no immediate steps Thursday to halt the run-up in pump prices.
After a lunch with Greenspan, Bush warned of temporary gas shortages in the coming weeks and called on Americans to conserve energy.
"Don't buy gas if you don't need it," the president said at a White House appearance.
With eight major refineries incapacitated, Bush said, "It's going to be hard to get gasoline to some markets."
He did not elaborate, but oil industry experts said the Midwest, the South and perhaps the Atlantic seaboard would probably experience shortages.
Some economists said Katrina's toll could be more far-reaching than the Sept. 11 terrorist attacks, for example, because of its potential effects on trade and key sectors of the U.S. economy.
The U.S. is the world's biggest agricultural exporter. Most crop exports float down the Mississippi River on barges and then are transferred to ships at one of the Gulf Coast ports.
Massive damage to the region's ports would idle the barges that transport oil, sugar and grain along the Mississippi River.
That would mean that farmers in the South and Midwest who depend on the waterway to ship their goods to foreign markets would lose a cheap shipping route. On Thursday, many fully loaded barges drifted with nowhere to go.
Retailers who use Gulf Coast ports to receive their imports also have to scramble to find alternative docks.
Although they generally aren't predicting a recession soon, many economists have lowered their estimates for economic growth, in part because of Katrina. Experts who previously predicted that growth in the current quarter would exceed an annualized rate of 4% now expect the pace to fall below 3.5%. Others think growth could fall below 3%. The economy expanded by 3.3% in the April-June quarter.
Federal Reserve policymakers have raised their benchmark short-term rate 10 times, by a total of 2.5 percentage points, since June 2004 in an effort to control inflation.
Until recently, most analysts had thought the Fed would boost its key rate an additional three-quarters of a point before stopping. But now many traders are betting that there will be only one more quarter-point increase -- from 3.5% to 3.75% -- in the so-called federal funds rate, the interest banks charge each other for very short-term loans. The central bank's next rate-setting meeting is Sept. 20.
"What Katrina has done is shift the economic focus from inflation to growth," said David M. Jones, a Denver economic consultant and veteran Fed watcher.
"I think what you'll see is the Fed pausing at its next meeting, citing special circumstances," he said.
The crisis has hit the airlines particularly hard, with a surge in jet fuel prices and the loss of passenger traffic in the Gulf Coast region. Carriers such as Delta Air Lines and Northwest Airlines already were perilously close to filing for bankruptcy protection, and Northwest said Thursday that it now had even less time to slash costs if it hoped to avoid a filing.
Concerned about a possible economic slowdown triggered by high energy costs, investors have driven down bond interest rates this week. That also represents an immense bet that the Federal Reserve's rate-raising days are coming to a swift close as a result of the hurricane.
Greenspan had no comment after meeting with Bush. The central bank, however, joined other federal regulatory agencies late Thursday in issuing a plea that banks in the affected region help people get back on their financial feet by doing such things as waiving ATM fees, increasing the amount allowed for daily cash withdrawals and permitting people to get at their savings without having to pay penalties.