Is the spill that big a deal?

It's a regional catastrophe, of course, but its economic impact on the U.S. economy isn't likely to be all that severe, certainly when compared with other headaches (state deficits, global financial fears, double-digit unemployment, etc.). Moody's Economy.com estimates that the Gulf areas being hit by the disaster represent only 1 percent of the U.S. gross domestic product - and not all that economic activity will cease. Actually, businesses already are shifting emphasis to accommodate demand. From the WSJ:

The oil spill has prompted a sales shift at boating-parts company West Marine Inc., which has 20 stores in the Northern Gulf region and another 20 on Florida's west coast. Sales of items such as boat barbecues, floats and GPS devices are down as the disaster cuts into recreational boating. In response, West Marine is ramping up production of commercial products such as anchors, flares and life jackets to outfit emergency responders, Chief Executive Geoff Eisenberg said. "We have a significant supply chain and as demand for products changes we try to react to it immediately," he said, adding that overall, sales are steady. The drop in recreational purchases has been offset by commercial sales as boaters join the cleanup efforts, Mr. Eisenberg said.

What about seafood? Well, very little of what we eat comes from Gulf waters. Thailand, for example, is the top foreign source of shrimp (accounting for a third of U.S. imports). The next biggest sources are Ecuador, Indonesia, China, Mexico, Vietnam, Malaysia and India. (Don't take my word for it - just look at the frozen shrimp packages at Trader Joe's). From US News:

For most people, seafood is a discretionary good, something that might be nice to have every now and then, but isn't essential. Seafood, in fact, is a tiny part of the American diet. The average American eats just 16 pounds of seafood per year, compared to 76 pounds per person in France and 139 pounds in Japan. Americans eat five times as much chicken and four times as much beef.

Oil? There's certainly no sign of tumult in the markets, where the price of crude has been trading in the $70-$72 range. Some concern has been raised about a drilling moratorium in the Gulf, but the White House said it will move quickly to announce new safety requirements to allow the reopening of offshore oil and gas exploration in shallow waters. Deepwater drilling faces much greater scrutiny and regulation, but that only accounts for 170,000 barrels of oil per day--less than three percent of the 7 million barrels Americans consume. In the big picture, it's not significant.

I bring all this up not to dismiss the terrible things that are going on down there, but to point out that the emotional response to a disaster can sometimes block out everything else. That appears to be happening in this case.