The Advocate hosted an economic outlook summit on Tuesday morning, focusing on the state of the Baton Rouge economy and how coronavirus has impacted it.
The panel, sponsored by Hancock Whitney, was an hour-long discussion with some of the capital city's biggest names in business.
Here's a quick look at five big topics that were discussed:
Job losses because of the coronavirus pandemic are still high in metro Baton Rouge, but some economic indicators are showing signs of improvement.
The coronavirus pandemic caused the number of people working in metro Baton Rouge to drop as much as 13%. In comparison, the Great Recession led to a 6.2% drop in employment, said Adam Knapp, president and chief executive officer of the Baton Rouge Area Chamber. There has been a slight recovery in the number of people who are working in recent months, but the figures are still down dramatically.
There are some trends that are back to or close to levels they were pre-pandemic. Retail fuel sales, an indicator of how many people who are traveling, are close to or above where they were in summer 2019. Hotel occupancy data has been trending up in recent weeks and is near where it was a year earlier. Spending at retail stores is pretty much back to where it was in Ascension and Livingston parishes, although in East Baton Rouge, it’s still 8.4% down from 2019, Knapp said.
Construction projects at area petrochemical plants have been canceled or slowed down, but maintenance and turnaround work continues.
A quarterly survey of petrochemical plant managers found that the forecast for expansions is “very, very low,” said Connie Fabré, president and chief executive officer of the Greater Baton Rouge Industry Alliance. Plants are looking to cut costs where they can, so construction projects have been canceled or slowed down. And some sectors the plants produce products for, such as automobiles and durable goods, have been hard hit by the pandemic.
But Fabré said maintenance and turnaround work at the plants has continued. Because facilities are running slower, they are taking the opportunity to get work done, while making sure employees are taking precautions and social distancing. That’s helped hold the line on employment, she said.
The pandemic is the most serious challenge to the system of modern health care in history.
Controlling and confronting the pandemic led hospitals to shut down elective surgeries and highly profitable surgical centers and convert patient visits to online treatment, said Terrie Sterling, a health care consultant who previously served as chief operating officer for Our Lady of the Lake Regional Medical Center. At the same time, hospital expenses shot up because of the increased staffing and high usage of personal protection equipment. The American Hospital Association estimates that the hospital industry lost $200 billion during the first four months of the pandemic.
Sterling said without reimbursements from the federal government, hospitals will not be able to sustain themselves and may be forced to furlough staff and stall improvements. “We’re hoping for additional financial resources,” she said.
For the next year or two, commercial real estate will be a tenants’ market.
If you are considering expanding or finding a new location for your business in the next 12 to 24 months, landlords will be glad to take your phone call, said Jonathan Walker, senior commercial sales and leasing executive at Maestri-Murrell Real Estate. The pandemic has affected all aspects of the commercial real estate business. Established national retailers including Neiman Marcus, J.C. Penney and Stage have all filed for bankruptcy and are shuttering hundreds of stores. The demand for new office space is in a state of flux because companies don’t know how much room they will need in the future because so many employees have been working from home for months. Slowdowns in the oil and chemical industry have reduced the demand for industrial space. One of the few bright spots has been the apartment market, but Walker said that could be slowing down now that the expanded federal unemployment benefits that allowed so many people to keep on paying rent have lapsed.
The biggest question: Has the pandemic led to a change in consumer habits?
After months of people working, exercising and cooking at home, will they be ready to go back to the office, rejoin their fitness center or go back to eating in restaurants. “Have we created totally new habits?” Walker said. The answer to this question won’t be known for several months.