LSU E. J. Ourso College of Business Professor Emeritus of Economics Loren Scott
State’s downturn worst since the 1980s
Louisiana will suffer a 5.3% job loss in the first half of this year — 104,400 jobs — due to the impact of COVID-19, according the 2021-22 Louisiana Economic Outlook.
The downturn will be the worst the state has experienced since the early 1980s when Louisiana lost 147,900 jobs (-9%) over a six-year period.
The report is produced by LSU E. J. Ourso College of Business Professor Emeritus of Economics Loren Scott and Greg Upton, associate professor-research at the Center for Energy Studies.
The report was presented virtually at the Greater Baton Rouge Business Report’s annual Top 100 Luncheon.
The forecasts are undergirded by the assumptions that the national economy will recover about 72% of the losses in the first half of 2020 and will achieve 100% recovery sometime in 2022; inflation and interest rates will remain low to aid the economy’s rebound; oil prices will increase from $40 per barrel this year to $48 in 2022 (a most uncertain forecast); and natural gas prices will rise from $1.60 per MMBtu this year to $3.10 by 2022.
The COVID-19 impacts and projections for Louisiana’s nine MSAs and its 29 rural areas are as follows:
— Because of its heavily hit tourism, casino, and exploration base, the New Orleans MSA was the hardest hit in the state by the pandemic, losing 37,300 jobs (-6.4%). The MSA is projected to add 29,100 jobs (+5.3%) in 2021 and 6,800 jobs (+1.2%) in 2022—leaving the region about 1,400 short of full recovery. Final investment decisions (FIDs) on a couple of large industrial projects and recovery back to pre-COVID norms will drive this employment pattern.
— Pounded by losses in industrial construction and closed casinos, the Baton Rouge MSA was hit as bad as New Orleans in 2020, also losing 5.3% of its employment (-21,800 jobs). Full recovery of its casinos and a newly robust industrial construction sector— driven by large turnarounds, resumption of construction on staled projects, and FIDs on new ones—should cause this MSA to add 17,3000 jobs in 2021 (+4.4%) and another 5,800 in 2022 (+1.4%). This MSA should be one of only three in the state to recover all jobs lost during the pandemic by 2022.
— Standard COVID impacts combined with weak oil prices clobbered the Lafayette MSA causing it to lose 5.3% (-10,800) of its jobs in 2020. Oil prices below $50 a barrel will tend to hold growth in this MSA back, but stability in its Big Six—Stuller, Acadian Ambulance, the SCP Group, GCI, Waitr, and LHC—will help this MSA resume growth. Lafayette is projected to generate 5,400 new jobs (+2.8% ) in 2021 and 1,800 jobs (+0.9%) in 2022 leaving it about 3,600 jobs short of full recovery.
— The state’s fourth largest MSA—Shreveport-Bossier—is also Louisiana’s second largest casino market which was closed for three months due to COVID. It also lost three large employers in 2020, leading to the third largest loss in 2020 (-10,600 jobs or – 5.9%). This MSA is projected to add 6,400 jobs in 2021 and another 1,000 in 2022, recovering only about 70% of the jobs lost in 2020. Activity at the Port of Caddo-Bossier and NCRP remain bright spots in this economy.
— The Lake Charles MSA contains the state’s largest casino market and one of its largest industrial construction markets, both heavily impacted by COVID-19. The result is Lake Charles lost 7,000 jobs in 2020, the second worst hit (-6.1%) in the state. The good news is this MSA has $13 billion in LNG projects underway and potentially $58 billion in the wings. Lake Charles is expected to add 5,000 jobs (+4.7%) in 2021 and another 2,100 jobs (+1.9%) in 2022, fully recovering all the COVID-related jobs lost. The report does not include the impact of Hurricane Laura on the Lake Charles area.
— After stabilizing in 2018-19, the Houma MSA resumed its downward march in 2020, pummeled not only by COVID but also by weak oil prices that drove the rig count in the Gulf down to only 12. This MSA lost 4,600 jobs in 2020 (-5.3% ). The report is projecting 2,500 new jobs (+3%) in 2021 and 700 jobs (+0.8%) in 2022, leaving the region still about 1,300 jobs below its pre-COVID level.
— The Monroe MSA—having no casino market and little industrial construction or exploration activity—was one of the least impacted MSAs in the state by COVID-19, losing 2,600 jobs (-3.3%). Growth coming from this MSA’s healthcare sector will help Monroe recover. The report expressed concern about the future of CenturyLink post-merger. The report projects 800 new jobs (+1.1%) in 2021 and 400 more (+0.5%) in 2022. Monroe is not expected to recover all its pre-COVID related job losses by 2022.
— Like Monroe, the Alexandria MSA was saved by the worst parts of the pandemic by the absence of casinos, major industrial construction and exploration activity. The MSA lost an estimated 2,000 jobs (-3.3%) in 2020. Employment at this MSA’s major employers remains solid, but no major economic development projects are on the immediate horizon. The report is projecting 1,100 new jobs for 2021 (+1.8%) and another 400 jobs in 2022 (+0.7%). This would leave the MSA about 500 jobs short of its pre-COVID peak.
— The Hammond MSA, like Monroe and Alexandria, is devoid of the hard-hit sectors like casinos, major industrial construction and exploration activity so it was more lightly tapped by the pandemic than its sister MSAs. Tangipahoa Parish lost an estimated 1,500 jobs in 2020 to the virus. With its two major employers—SLU and North Oaks Hospital—stabilized Hammond will need growth in New Orleans and Baton Rouge to generate new jobs for its large commuter group. The report expects the college town and region to recover 1,000 jobs in 2021 (+2.2%) and another 500 in 2022 (+1.1%), just recovering all the jobs lost due to the pandemic.
— COVID exacerbated an employment decline in Louisiana’s 29 rural parishes that began back in 2014. The virus tagged this region with a loss of 7,200 jobs in 2020, a decline of 3.3%. The report is projecting 4,000 new jobs (4%) in these parishes in 2021 and 2,000 jobs (+1.1%) in 2022. This growth will leave the rural regions of the state about 1,200 jobs short of its pre-COVID peak.
— Louisiana as a whole will leave 2020 with 105,400 fewer jobs than pre-COVID after suffering a devastating hit in the first half of then recovering about 72% of those lost jobs in the second half of 2020. By the end of 2022, the state will have recovered about 90% of those jobs.
Summing up across all the regions, the report projects the state will recover 72,600 jobs in 2021 (+3.9%) and another 21,500 jobs in 2022 (+1.1%). This will leave Louisiana about 11,300 jobs short of recovering all the jobs lost from COVID-19.
According to Scott and Upton, “It is important to state that these are the most uncertain forecasts we have ever produced. It is not difficult to create a scenario in which a quickly developed vaccine and more robust oil prices could pull the state out of the COVID chasm much more quickly. It is a prospect worthy of hope.”
The LEO is made possible by platinum sponsors: BlueCross BlueShield of Louisiana and Cleco; gold sponsors: Entergy, Gallagher, Home Bank, ISC and Shell; and silver sponsor: ExxonMobil.
Copies of the LEO are available for purchase for $75 by visiting lsu.edu/business/leo or calling 225-578-5211.