Washington ? Factories were chugging, cash registers were busy and jobs were growing in the late summer – fresh proof that the economy was in fine condition before Hurricane Katrina slammed into the Gulf Coast, spreading death and destruction.

The Federal Reserve’s latest snapshot of business conditions around the country, released Wednesday, was taken before the hurricane struck last week. The storm knocked out essential oil and gas facilities, choked transportation and shipping and wiped out businesses and homes.

Now private economists and the Congressional Budget Office expect fallout from the storm to cause overall U.S. economic activity to slow in the second half of this year by one-half to a full percentage point on an annualized basis. Jobs also are expected to take a hit in the coming months.

The Congressional Budget Office is predicting a total of 400,000 job losses through the end of this year. Privately insured losses could exceed $30 billion, the agency said.

The impact of the storm on the budget deficit is unclear, CBO said. Before the storm, the White House was projecting a budget deficit this year of $333 billion, which would have been an improvement from last year’s $412 billion deficit, a record in dollar terms.

Aura Lopez, left, talks with a job counselor as she and other New Orleans evacuees attend a job fair Wednesday in downtown Houston. Lopez is hoping to find a secretarial job.

The hurricane catapulted already elevated gasoline prices and other energy prices even higher. Prices for lumber, coffee and a variety of other goods are likely to head up given disruptions wrought by the storm and high fuel costs to transport goods, private economists predicted.

Against this backdrop, overall consumer prices in the second half of this year are now expected to be higher than analysts were anticipating before the storm.

Before the storm, “except for energy, overall consumer price increases were modest,” during the last two months, according to the Fed’s survey.

The Fed also found that manufacturing activity increased in most of the Fed’s 12 regional districts, retail sales and tourism activity strengthened in most regions and the jobs climate improved – all before Katrina hit.

Economic uncertainty from the disaster is leading some economists to predict that Fed policymakers will forgo raising short-term interest rates at their next meeting on Sept. 20. Such a move had been considered a virtual certainty. Others, however, continue to believe the Fed will boost rates at that time to keep inflation under control.

The Fed’s survey also found that the housing boom showed “signs of softening in some markets.”

The Fed districts of Kansas City, New York, Philadelphia and Richmond all observed strong home sales, “but signs of cooling were evident,” the survey said. Some areas reported that residential construction activity was brisk but down from a year ago. St. Louis described such activity as “lagging.”

Fed Chairman Alan Greenspan has repeatedly warned that homeowners, lenders and investors can’t count on the housing market – and sizzling home prices – to remain hot forever.

The market, he said, will eventually cool and people who really stretched their finances to buy a home could get hurt if the value of their home falls or if interest rates jump.

The Fed’s survey is based on information collected before Aug. 29 and supplied from its 12 regional banks.