The total number of jobs in Louisiana dropped by 11% in the first half of this year due to COVID-19, a mark that is nearly double the 6% drop after Hurricane Katrina in 2005.
The state lost 218,000 payroll jobs in the first and second quarters while the state’s economy contracted at an annualized rate of 6.6% in the first quarter as the national economy officially entered a recession, according to data compiled by Gary Wagner, Acadiana Business Economist at the University of Louisiana at Lafayette, in his quarterly Louisiana Economic Activity Forecast.
The economy will pick back up for the remainder of the year, but a national full recovery is not projected until the fourth quarter of next year at the earliest. In Louisiana, he noted, that recovery will be slower, and the economy could be 7% smaller than it was at the end of last year.
“Louisiana’s (GDP) contraction of 6.6% was one of the sharpest drops in the nation,” he wrote. “Only Michigan, New York, Nevada and Hawaii experienced larger downturns in economic activity.”
The state’s unemployment rate was at 13% at the end of the second quarter, which was just below the previous high of 13.1% in 1986 and more than double the 5.7% in January prior to the shutdown. More than 800,000 more people than the state’s historical average have filed an initial unemployment claim since March 14, he noted.
A recovery, he noted, could come slightly quicker than anticipated thanks to improvements in sales tax collections and the real estate market. In his last report, Wagner — whose outlook include baseline, optimistic and pessimistic predictions — didn't call for a growth in sales tax collections until midway through 2021, but the increase in spending of late means there could be positive growth in that area early next year.
“As bad as some of the numbers we had between the first and second quarters, turns out that a lot of those indicators were a little better than what I was projecting back in May,” he said. “I think one of the reasons was the additional unemployment benefits. That really helped to boost consumer spending. At the time of the previous report, there was some uncertainty about how long that would last. We now know it’s going to continue to the end of 2020.”
Each of the state’s metro areas will see positive job growth for the rest of the year, he noted, but not enough to recover jobs lost this year. Quarterly sales tax collections outperformed earlier projections, and that was because of the expanded federal unemployment benefits that are expected to last through the end of the year.
The Baton Rouge, Lake Charles and New Orleans areas lost more than 10% of their jobs, he noted.
In Baton Rouge, there were 366,000 people employed in Baton Rouge in the second quarter, down from the 415,000 jobs at the end of the year. The area is predicted to get to 400,000 jobs by the third quarter of 2021 and could have the strongest recovery among the state's metro areas.
In New Orleans, the second-quarter job loss was more significant, dropping from 581,900 jobs to 489,900. That area could get to 543,000 jobs by the end of the third quarter of 2021.
In Lafayette, the jobs dropped from 202,000 to 184,300 in the second quarter. Wagner predicts that region’s job growth to be flatter, getting to 194,800 jobs by the third quarter of 2021.
“It looks like the petrochemical sector is probably going to do a little bit better than average,” Wagner said. “You don’t have a large loss in government jobs. They haven’t seen the losses that the private sector has.
“Nothing is going really well at this point in time. Even though I am predicting Baton Rouge to have the strongest job growth in the second half of the year, no region is going to gain back all the jobs that were lost.”
Home values are expected to remain positive and continued to rise through 2019 thanks to a real estate market that’s has not hit a snag in recent months. Baseline predictions have home values having below-average growth in 2020 before rebounding to average levels in 2021.
Low interest rates are not only prodding people to buy homes but also investors to purchase real estate.
“There’s a lot of investment in real estate right now,” Wagner said.
Acadiana Business Today: Economist: Total jobs lost in Louisiana due to COVID-19 now nearly double total lost from Katrina
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