Prior to the left-right combination of Katrina and Rita (Katrita for short), the economy was headed toward a very satisfactory 2005. Growth in the first half of the year was at 3.6 percent and seemed to be accelerating. This extended the solid recovery that began in earnest during 2003 (see Figure 1). Employment growth was averaging over 190,000 per month, implying about 2.3 million new jobs for the year. Unemployment in August was below 5 percent, down one-half percent from the end of 2004 (see Figure 2). Inflation (measured by core consumer prices—that is, excluding the volatile food and energy sectors) was stable at about 2 percent. It was reasonable to expect that 2006 would bring a continuation of these trends.