WASHINGTON - The Midwest flood at first had virtually no effect on analysts' expectations of national economic indicators, but their view has changed as the flood drags on, now deluging thousands of acres of farmland south of St. Louis.

For example, some public and private economists have modestly revised upward their forecasts of inflation as a result of Midwestern flooding.

And the President's Council of Economic Advisers anticipates a small degree of upward pressure on consumer prices this year and next from the flood, according to a staff economist with the council.

Specifically, the council expects that as much as 0.2 point will be added to this year's gain in the consumer price index from the flood and as much as 0. 1 point will be added next year, said the economist, who asked not to be named.

In addition, the council foresees that as much as 0.8 point will be added to the gain in the producer price index this year and up to 0.4 point next year, the economist said.

"It's very hard to quantify the effects of the flood but we're pretty sure you're going to see short-run negative effects," he said.

Analysts at the WEFA Group near Philadelphia expect the flood to add 0.1 point to the CPI's gain in the third quarter, on an annualized basis, and 0.2 point in both the fourth quarter and first quarter of next year, according to Joseph Ford, senior financial analyst with the forecasting firm.

"Food prices will shoot up a little bit," Ford said, but all things considered, the flood's impact on overall inflation will be "negligible." Certainly, the financial markets and the Federal Reserve will view it that way, he said.

However, other analysts speculated that the flood's impact on food prices may not be large enough to translate into a noticeable change in the overall CPI.

"There will be some upward pressure on agricultural prices," said Fred Sturm, economist with Fuji Securities Inc. in Chicago. "The direction in prices is clear but the magnitude is not so clear."

Sturm said food prices may not rise as much as some expect because farmers will draw from plentiful inventories left from a record harvest last year. "They are apt to draw down on those inventories," he said.

Other factors could offset rising grain prices, said Stuart Hoffman, chief economist of PNC Bank Corp. Meat prices may decline as cattle are taken to market early to avoid a feed shortage, he said.

Also, farmers in other areas are likely to expand output to take advantage of higher prices at market, which in itself will help to hold prices down, Hoffman said.

"I'm not worried about the flood in an inflation context," he said. "Markets tend to adjust."

As for economic growth, floods and other natural disasters tend to depress gross domestic product initially, then boost it later as the victims spend money on cleanup and rebuilding. Ironically, disasters tend to have a net positive, not a net negative, impact on growth.

"In theory, the flood will put a small drag on GDP in the third quarter and then add it back in the fourth quarter," Hoffman said.

However, he and other analysts said the flood is likely to have a relatively small effect on third and fourth quarter growth estimates because only a small fraction of the U.S. population has been affected.

The Council of Economic Advisers estimates that less than 5% of the U.S. population has been affected by either flooding or heavy rains in the Midwest, according to the staff economist.

The council also estimates that the flood has destroyed roughly $2.5 billion to $3 billion in crops, which will be subtracted from GDP. This is likely to be offset by a proposed $4.5 billion federal aid package to the region, the economist noted.

Economists generally agree that the flood will have much less of an effect on growth estimates than Hurricane Andrew did last year.

Henry Willmore, an economist with Chase Manhattan Bank, noted that the flood is disrupting far fewer workers and their incomes than Hurricane Andrew did in Florida.

Nonetheless, Willmore said, the flood could cut up to 0.5 point off real growth in the third quarter.

Several analysts noted that the flood is likely to produce a much smaller rebound effect on growth in subsequent quarters than Hurricane Andrew did because less property in the flooded area is covered by insurance than was the case in Florida.

The Council of Economic Advisers estimates that only about 10% to 15% of the homes destroyed by the flood are covered by flood insurance. This compares to about 75% of the homes covered by insurance that were damaged by Hurricane Andrew, the staff economist said.

Also, anywhere from 15% to 90% of a farmer's crops are covered by federal crop insurance depending on what programs the farmer was participating in, the economist said. But at the moment it is impossible to determine what the average coverage is, he said.

The council anticipates some drag on growth in the third quarter that could spill over into the fourth quarter and then some boost to growth after that, the staff economist said.

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