After the novel coronavirus pandemic dealt blows to national and local economies alike, economist Loren Scott says there are two large uncertainties to keep in mind when projecting economic recovery through 2022—a vaccine and the presidential election.
“This has been the toughest forecasting market we’ve ever faced,” Scott says.
Scott presented his annual Louisiana Economic Outlook as the keynote speaker of Business Report’s Louisiana Business Symposium today, honoring the Top 100 private companies in the Capital Region.
Through July, Louisiana has regained 49% of the jobs lost since April, with most sectors seeing progress toward recovery.
As a sector, state government is the healthiest, having grown employment by 193% since April.
While the New Orleans metro lost the most jobs in April (107,400), Scott points to the Lake Charles metro as the highest percentage loser of jobs, with nearly 20% of jobs in the metro lost in April. Lake Charles boasts the largest casino market in the state as well as a lot of industrial construction, two sectors that were heavily impacted by the pandemic and restriction-related closures.
The Baton Rouge MSA was one of the hardest-hit metros in the state from the pandemic and its related stay-at-home orders, with some 52,800 jobs—12.7% of the metro’s workforce—being shed in April. While the metro carries three casinos and a significant amount of construction employment, the state government sector shielded the Capital Region from “getting hit as hard as other areas,” Scott says. It is because of the state government sector that the MSA has regained 51% of jobs lost since April.
The Baton Rouge metro is expected to be one of three metros in the state to recover all of its jobs lost to the pandemic by 2022. The Alexandria and Hammond metros are also expected to make a full recovery in the next two years.
The recovery here won’t be quick, Scott warns, and will resemble more of a “Nike Swoosh” than a straight “V.” The recovery projection hinges on a few key assumptions becoming a reality.
Banking on large petrochemical plant turnarounds, the resumption of construction on stalled industrial projects and final investment approval on new projects, Scott projects the Baton Rouge metro to add 17,300 jobs in 2021 and another 5,800 in 2022. He goes on to say that a resurgence of the restaurant and retail sectors along with an increase in industrial construction and the anticipated start of several big-dollar public-sector infrastructure projects will drive Baton Rouge metro growth.
There’s already some $4.2 billion worth of projects underway in the Baton Rouge metro area, although the $1.4 billion Methanex 3 project in Gonzales has been put on a “strong pause” and another multimillion-dollar project through ExxonMobil has slowed. Scott points to $6.2 billion in projects that have been announced but have yet to receive a final investment decision as a significant key to recovery. Some projects, like the $1.2 billion Shell Chemical project, have been postponed for 18 to 24 months.
Statewide, Scott forecasts Louisiana will leave 2020 with 105,400 fewer jobs than before the pandemic. By the end of 2022, the state will have recovered about 90% of those jobs, with 72,600 jobs returning in 2021 and another 21,500 in 2022.