The U.S. economy will still expand in 2005 and 2006 despite the damage inflicted by hurricanes in the southern United States, according to a new forecast publication released today by the Conference Board.

In its U.S. Outlook-Autumn 2005, the research organization says real gross domestic product (GDP) will still expand by 3.6% in 2005 and 3.1% in 2006.

“Real GDP will decline in the second half of 2005 because of the severe hurricane damage and the spike in energy prices, which will cut into consumer spending,” said Kip Beckman, author of the report. “Much of the loss, however, will be made up in 2006 through the rebuilding efforts, as insurance money and government assistance is delivered to the affected region.”

About one-third of the 900,000 workers in the hurricane-damaged areas of the U.S. have lost their jobs, a severe loss in output and employment that will cut about 0.5% from U.S. real GDP in the second half of 2005.

Soaring energy costs will weaken consumer spending growth in 2006. But the effect of high energy prices will be blunted by healthy gains in employment of 1.7% next year. Investment spending will also strengthen the overall U.S. economy, as corporate profits are expected to increase at a healthy pace, due to solid productivity gains and a weaker U.S. dollar.