No. What happens is that the economy grows despite the tremendous blow, only slower than it would have if the disaster had not occurred. Otherwise, as another poster remarked, we could do the economy untold benefit by carpet-bombing California.
"we could do the economy untold benefit by carpet-bombing California."
Well some people might be in favor on a limited basis of doing this. Berkeley, San Francisco, Santa Cruz...
Not always. Most of this money comes from very conservatively invested funds in insurance companies. These newly invested funds generally generate much higher growth tahn the old capital was providing. So the pie may get larger (but with New Orleans corruption, this may not be the case).