Key Issues in 2018: Baton Rouge economy slowing but still growing

    STILL A SPARK: Though the industrial construction boom is slowing in the Capital Region, the Baton Rouge economy is still expected to show slow growth in 2018.

    Economist Loren Scott delivered the inevitable bad news during his annual Louisiana Economic Outlook address in October, predicting Capital Region job growth will slow in 2018 as the industrial construction boom winds down.

    The Baton Rouge Area Chamber, meanwhile, paints a somewhat brighter picture in its economic forecast, predicting a 4,500 job gain in 2018—much higher than the 2,900 jobs Scott forecast for the year. Still, the projected growth rate is less than previous Capital Region forecasts.

    Bottom line: There’s agreement the Baton Rouge economy will cool in 2018. How much is the question.

    Nearly $16 billion in announced industrial projects are either completed or nearing completion throughout the Capital Region. As construction work winds down, the job growth rate will drop below 1% in the next two years, according to Scott’s analysis. By the end of 2018, Baton Rouge is expected to lose more than 3,000 construction jobs.

    “That can’t help but be something of a drag on the economy,” Scott says.

    Adding to those losses is the residential side of the construction industry, which will also see a job decline associated with people finishing up with flood recovery. The impact will be seen in upcoming sales tax collection reports. Collections saw an uptick after the flood as people bought equipment and materials to rebuild, but they will soon drop now that most areas have recovered.

    A cooling economy, however, does not mean Baton Rouge isn’t still growing. High-paying jobs will result from the industrial companies recently built in the Capital Region, which BRAC President and CEO Adam Knapp highlighted in the chamber’s economic outlook. This is one reason BRAC’s numbers are higher than Scott’s. Moreover, many of the locally-based industrial construction and engineering firms have high-dollar contracts outside of the area.

    Other growing sectors of the job market in 2018 will be information technology, expected to see the greatest growth, and health care, thanks to major projects such as Our Lady of the Lake Children’s Hospital and the Provident proton therapy center underway in Baton Rouge.

    Both state and local economies could also see a boost from a faster-growing national economy, estimated to expand by 2.5% in 2018, according to Scott. That projection may rise now that Congress has passed a tax reform plan. President Donald Trump’s pullback on regulations is also expected to spur economic growth.

    In short, as the industrial construction boom winds down and brings an end to the heated economic growth Baton Rouge has enjoyed in recent years, other employment sectors are ready and willing to pick up the slack.

    Other Key Issues:

    • Baton Rouge Mayor Sharon Weston Broome looks for smoother sailing in year two.

    • Facing a “fiscal cliff,” is this the year Louisiana gets serious about budget reform?

    • Will a smaller, quieter St. George incorporation effort be successful?

     • A city still stuck in traffic…and no solutions in sight.

    • Can supply meet region’s growing technology workforce demand?

    • Can supply meet region’s growing technology workforce demand?