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Katrina Continues Her Damage

New York City, The destruction caused by Hurricane Katrina—and the uncertainty surrounding those affected—dominate the news this morning. From a retail perspective, store closings and the expected surge of gas prices will exact a heavy toll from chain stores. At one point, Wal-Mart Stores said up to 3.3% of its store base in the United States was forced to shut down as a result of the hurricane. Two distribution centers also were forced to close.

But according to analysts, the impact of the damage will be felt in other ways. “If the hurricane contributes to even higher gas prices, according to a Merrill Lynch research note, “The effect is likely to be broad-based, as consumers look to trim spending further. We do not anticipate a wholesale retrenchment, but we could see more trading down and less discretionary expenditures."