On August 29, 2005, Hurricane Katrina struck the U.S. Gulf Coast as a category 3 storm. Louisiana and Mississippi suffered the most damage; all counties in Mississippi and parishes in Louisiana were declared federal disaster areas. The parishes and counties along the Gulf of Mexico and around the mouth of the Mississippi River were hit the hardest. The immediate economic impact of Hurricane Katrina included sharp declines in county and parish employment and spikes in unemployment rates in the metropolitan areas.
From the fourth quarter of 2004 to the fourth quarter of 2005, employment declined 65.3 percent in St. Bernard Parish, Louisiana, and 40.8 percent in Orleans Parish, Louisiana (New Orleans is in Orleans Parish). Among Mississippi counties, Hancock County (-26.2 percent) and Harrison County (-19.6 percent) suffered the largest percent declines in employment over the same period.