Sluggish growth in Baton Rouge’s production of goods and services and nearly flat employment gains since the end of the nation’s Great Recession landed the capital region in a middle ranking in a recent study measuring the rate of recovery of the nation’s 100 largest metro areas.
“Really, the only thing that was going well for Baton Rouge during the recovery was the housing market,” said Harold Wial, a researcher in urban and regional issues at the Brookings Institution, which recently released the report, “MetroMonitor: Tracking Economic Recession and Recovery in America’s 100 Largest Metropolitan Areas.”
“All the other indicators were pretty bad, as far as recovery went, and that’s why Baton Rouge ended up ranking so low in recovery.”
One reason Baton Rouge did not score so well in the Brookings study is because the region simply did not fall very far during the recession, leaving little room for the kind of bounce back that harder-hit areas experienced, researchers say.
“Part of that may be the fact that our trough was very shallow, very shallow, compared to other folks,” said Loren Scott, a retired LSU economist and a longtime observer of the state’s economy.
“You also have to remember that when we’re looking at recovery, we’re looking at how far a place has come on each of the indicators since it reached a low point,” Wial pointed out.
“And basically Baton Rouge is in the middle of the pack when it comes to that,” he added. “Not so terrible, except for gross metropolitan product. And very, very good in terms of house prices, where we see just a small drop compared to other places.”
Baton Rouge landed in the “Middle 20 Metros” overall performance during the recovery behind two groups — the “Strongest 20 Metros” and “Second-Strongest 20 Metros that led the group’s survey.
Perhaps the biggest boost to Baton Rouge’s rankings was the relative strength of its housing market. Home prices slipped only 9.1 percent since their peak in the first quarter of 2009, earning Baton Rouge the No. 9 spot in this category, according to the MetroMonitor report. Other metro areas experienced housing price reductions averaging more than 26.5 percent, the report found.
However, the region’s growth in gross metropolitan product — a measure of the goods and services produced by a metro area — climbed 3.5 percent since its 2009 low, earning Baton Rouge the No. 80 spot out of 100. That compares to a 4.9 percent 100-metro and 6.4 percent U.S. average.
And while most cities have seen their unemployment rates decline during the economic recovery — however haltingly — Baton Rouge’s jobless rate has experienced a slow creep upward, climbing 1.6 points in the last year. The Louisiana Workforce Commission reported Baton Rouge lost 900 jobs between May 2010 and May 2011.
If Baton Rouge’s economic picture looks somewhat grim on paper, that doesn’t seem to be the street-level view, Scott said.
“If you look at sales tax collections and other indicators, you don’t even get the sense, being around this town, that things have gotten worse in the last year. Or at least, I don’t,” Scott said.
“And really, our economic base is weighed more heavily on the petrochemical side. And frankly, the petrochemical side is doing great,” he added.
The region’s petrochemical industry did experience some slowdowns during the recession, say industry watchers. But low-cost natural gas, high oil prices and a relatively cheap dollar have translated to a bullish petrochemical environment in Louisiana, said Dan Borné, president of the Louisiana Chemical Association.
“We are experiencing a renaissance in Louisiana’s chemical manufacturing sector as evidenced by recent announcements of major investments in new and in existing plants and in facilities that were once mothballed. More are coming,” Bornè said.
“The major shock absorber we had as we rode out the recession was the price of natural gas, and this same factor is currently providing the thrust for our healthy rebound,” he added.
What could be skewing the region’s job numbers, say economists, is a recent change in which the U.S. Bureau of Labor Statistics — the federal agency responsible for following employment trends — now collects and analyzes employment data rather than state agencies. The changeover nationally comes, in part, to prevent any statistical bias by state agencies and to save money, the BLS reported.
Peggy Lopez-Granier, with the research and statistics division at the Louisiana Workforce Commission, confirmed that the switchover to the federal agency collecting the data “is affecting the MSAs (metropolitan statistical areas,) more than when the states had input over the estimates.”
However, any inconsistencies are expected to get ironed out in the coming months, officials say.
Whatever the problems, they are affecting the region’s economic picture, Scott said, particularly when organizations like the Brookings Institution rely so heavily on employment data to flesh out the economic health of metro areas.
“If I was looking around and, No. 1, I saw sales tax collections declining, and No. 2, if I just had a sense that things in this area just really are off, I mean, things are really bad, then I would say, ‘OK, this makes sense,’” Scott said. “But neither one of those things are true. And as a matter of fact, kind of the opposite is true. Which makes me wonder if this thing that’s driving the whole rankings — and that’s the employment numbers — if there’s not something wrong with that,” Scott said.