Behravesh said that with airlines raising the cost of tickets to recoup higher jet fuel costs and with shipping companies adding on surcharges, the core inflation rate could be pushed as high as 0.4 percent in coming months.

If inflation pressures outside of energy do start rising, that could prompt the Federal Reserve to abandon its gradual quarter-point rate hikes for a more aggressive campaign to make sure inflation does not get out of control. The Fed meets next Tuesday.

"If underlying inflation begins to percolate higher, that will mean we will have to struggle with rising prices and higher interest rates," said Mark Zandi, chief economist at Economy.com.

Such a development would raise the risks of a full-fledged recession, something that economists still rate as a low probability. They contend that the most likely outcome of Katrina will be a reduction of 400,000 jobs over the next four months and a slowdown in economic growth of perhaps a full percentage point.

However, they are forecasting that the economy will be growing more strongly by early next year, with employment rebounding as reconstruction of damaged areas gets under way in earnest.

Zandi said this scenario will remain the most likely outcome as long as soaring energy costs do not spill over into widespread price increases in the rest of the economy. Such a development could rattle consumer confidence, causing them to cut back more severely on their spending.

A Pew Research poll released Thursday found 37 percent of those surveyed expect economic conditions will worsen a year from now. That was up from 18 percent in January and the highest level of pessimism about the economy since President Bush took office.

Part of that probably reflects the effect soaring gasoline prices are having on American pocketbooks. The government said Thursday that Americans' average weekly earnings fell by 0.5 percent in August, after adjusting for inflation. It was the fifth decline in the past eight months.

Ben Bernanke, chairman of the president's Council of Economic Advisers, said in a speech Thursday that Katrina will have a "palpable effect on the national economy" especially in the current July-September quarter. But he forecast that recovery and rebuilding efforts would boost growth perhaps as quickly as the end of the year.