It is a general rule that storm-stricken areas in the US tend to recover quickly as the loss of tourism and retail sales is overcome by a surge in construction. Yet, as they survey the Gulf Coast states ravaged by hurricane Katrina, and New Orleans in particular, economists are anxious about prospects for a fast rebound.

Part of the problem is the sheer magnitude of the damage, which is yet to be fully tallied. There are also the underlying economic weaknesses of an impoverished region that is reliant on a few key industries.

In a worst case scenario, some economists are speculating that many businesses and citizens could decide to simply take their insurance money and start over elsewhere rather than rebuild.

“People are openly making the argument that there is no point rebuilding a city that is located between the sea and a river and is below sea level,” Phil Hopkins, head of regional research at Global Insight, the consultancy, said. “If so, the local economy could be dealt a long-term blow.”

The concerns about the regional economy come in contrast to more measured predictions for the national economy. Several analysts have predicted that US growth could slow in the medium term as a result of rising energy costs, but should otherwise remain healthy.

At the moment, several of the Gulf Coast's best economic assets lie in ruins. Traffic on the Mississippi river has been curtailed while officials inspectdamage at the Port of New Orleans, which had been the beneficiary of $400m in improvements over the last decade. Activity within the port accounts for 107,000 state jobs and $13bn in spending.

“The outcome is not good, and it has been aggravated by unexpected flooding conditions following the storm,” Gary La Grange, the port's chief executive, said. “Yesterday, I thought the damage could have been worse, but today, I'm not so sure.”

In Mississippi, gaming operators were in the early stages of similar reviews. Damages appeared worst for riverboat casinos. Gambling taxes accounted for nearly 10 per cent of Mississippi's state's budget last year and were one of its top sources of revenue.

One factor that tends to help regions bounce back from catastrophes is their economic diversity. Unfortunately, Louisiana ranks 44th of America's 50 states on this measure.

The heavy dependence on tourism in New Orleans is a particular problem. The city accounts for about a third of total employment in Louisiana and around 40 per cent of the state's employees working leisure and hospitality are based in the city. With local officials predicting that it could take six months or more to drain the city of water, no one is expecting tourists to return soon.

There is unlikely to be much activity to take up the slack. “All of the three states affected by the hurricane have substantially lower shares of employment in fast growing sectors such as IT, financial services and business services,” Mr Hopkins said.

Additional reporting by Amy Yee