While the state’s economy overall is expected to remain flat in 2017, Baton Rouge is poised to see modest job growth for each of the next two years—more than any other area in the state except Lake Charles, according to economist Loren Scott, who delivered his annual Louisiana Economic Outlook at Business Report’s Top 100 luncheon today.
The nine-parish Baton Rouge area is projected to add about 4,500 jobs in 2017 and 4,500 more in 2018, which is more in absolute terms than any other metro region in Louisiana. In percentage terms—1.1% per year—it puts Baton Rouge at No. 2 in projected job growth behind Lake Charles, which is expected to see job growth of 3.6% in 2017 and 2% in 2018.
Both Baton Rouge and Lake Charles are the only two areas in the state experiencing such growth, and both economies are being propelled by the ongoing industrial construction boom. More than $38 billion worth of new construction or expansion projects have been announced for chemical companies along the Mississippi River between Baton Rouge and New Orleans. Of those, more than $10 billion are underway or have been completed.
“In Baton Rouge most of our projects are underway or have gone vertical,” says Scott. “So that is very positive. Those projects are real. That helps give us one of the fastest-growing economies in the whole country.”
Other areas of the state are not so fortunate. Continued low oil prices have led to job losses in the Lafayette and Houma-Thibodeaux areas, driving down job numbers in the state overall, a trend that is expected to continue next year.
While those numbers are bad—Lafayette lost nearly 9,000 jobs this year and is forecast to lose another 5,000 more next year—the numbers are “nothing compared to the 1980s,” when tens of thousands of oil patch jobs were lost, Scott says.
The nation’s sluggish recovery, the slowest post-recession recovery ever, isn’t helping things in Louisiana, Scott says. The U.S. economy is growing at around 2.2% a year, a trend that is expected to continue next year. Scott believes the state’s anti-competitive tax code also poses a risk to Louisiana’s future growth. He singled out recent changes to the 10-year Industrial Tax Exemption Program as particularly problematic.
In June, Gov. John Bel Edwards made changes to the program, tying the tax break to new job creation and also giving local governments a say-so in approving the lucrative incentives.
“You may think that’s fair but what we’ve done is moved the needle and made Texas more attractive (than us) as a place to do business,” he says. “Why we would do this right now when we have so much at risk is beyond me.”
Perhaps surprisingly, Scott does not expect the historic August flood to significantly impact the area’s economy, though he says how quickly the region recovers will depend on the amount of federal aid Congress appropriates to the state and its flood victims, and whether homeowners are required to elevate their properties.
“If anything, we are expecting an uptick in construction employment as all the insurance, FEMA and SBA monies begin flowing into the region for the rebuilding area,” he says.
Scott does expect local consumers to be a lot tighter with their spending during the holiday shopping season due to flood-related expenses they incurred earlier in the year. That, in turn, will hurt local retailers.
“We will have a sales tax boost that comes out of the flood, as people replace the items they lost,” he says. “But I don’t think this is going to be a great Christmas season. People just don’t have a lot of extra money to spend.”
Scott delivered his annual Economic Outlook at the Top 100 Luncheon held at the Crowne Plaza this afternoon. The event wrapped up the Louisiana Business Symposium, presented by Business Report. At a event held earlier in the morning, the Best Places to Work in Baton Rouge were unveiled.
—Stephanie Riegel
