"Energy is the big wild card. We just don't know where prices will be," said David Wyss, chief economist at Standard & Poor's in New York. "It will be a question of how fast oil refineries and oil pipelines come back."

The CBO said estimates of the impact on employment in September range from a decline of 150,000 jobs to a drop of as many as half a million jobs.

Some of that impact, however, will be offset in coming months, the CBO said. The report said employment growth over the final four months of this year would be 400,000, below the 600,000 to 800,000 pre-Katrina estimates.

Congress has approved $10.5 billion in emergency spending with more on the way. The White House said Wednesday that President Bush will ask lawmakers to approve an additional $51.8 billion to cover the costs of federal recovery efforts.

Many private budget experts are predicting increased federal spending for Katrina will push up next year's deficit by $100 billion or more, putting in jeopardy Bush's efforts to cut the deficit in half by 2009.

Holtz-Eakin said in his letter to congressional leaders that the economic fallout from Katrina should be concentrated in the second half of this year. He said economic activity could receive a boost next year from rebuilding, but the positive effects may take longer to register because of the extensive damage, especially in New Orleans.

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Contributing: David Espo