Mayor of New Orleans, Ray Nagin, says the Mardi Gras is a chance for New Orleans to lift its spirits again.
Some locals, however, see it as a chance to publicise continuing problems in poorer areas of the city still mainly in ruins and still more have criticised the decision to go ahead with it because the carnival has been cancelled in the past in times of national emergency.
Less tourists are arriving this year and local agencies have put the number of Mardi Gras visitors at about 400,000, which is less than half the normal number.
The financial crisis situation has also forced New Orleans to stop its search for bodies from Hurricane Katrina, with as many as 200 dead bodies possibly still trapped in the ruined homes.
However, considering what has happened there, Sandy Shilstone, the head of New Orleans tourism, said the visitor numbers were higher than expected.
"What Mardi Gras has done is really spearhead production and development here in this city," she added.
The Mardi Gras is due to be celebrated in the French Quarter but the parades will have passed through parts of the city devastated by the flood such as the Lower Ninth Ward.
