And it's sort of a trick question. If you analyze the statistics above, which are in line with my research as well, it all depends on what your criteria for "damage" is - material costs or human lives? A combination of both?
I could also argue that Hurricane Katrina did not cause the levy failures as much as faulty design and engineering did, so do we assess the damage for the hurricane? That is not to minimize the horror of Katrina and its effects. And the same situation in Central America is true where the construction is sub par and more susceptible to damage from hurricane force winds. If I had to choose, I'd say Mitch.
Hurricane Katrina was one of the five deadliest hurricanes to ever hit the United States and probably the costliest. Its winds were recorded at a maximum of 175 miles per hour, but the damage it caused is virtually indeterminable. More than 2500 people were either killed or remain missing following the August 2005 storm. Estimated losses totaled more than $80 billion. Katrina caused the New Orleans levees to break, flooding much of the city.
Hurricane Mitch was the most powerful storm of 1998 with winds recorded up to 180 miles per hour. The 180 mph winds are among the ten highest on record for Atlantic hurricanes. Mitch caused an estimated 11,000 to 18,000 fatalities with a monetary damage of $6.2 billion. The hurricane caused the most damage and loss of life in the Central American countries of Nicaragua, Guatemala and Honduras.
So, although Katrina caused greater monetary damage, Mitch was slightly stronger and killed far more people.