In the midst of extraordinary economic uncertainty, we can count on one thing: a pithy and quotable phrase from Loren Scott.
It’s not a V-shaped recovery in view, the economist and former LSU professor said, but a “Nike swoosh” recovery.
The good news is that shows the economy going up. Eventually.
Scott’s annual Louisiana Economic Outlook comes out in extraordinary circumstances: the coronavirus shutdowns are a uniquely challenging situation to forecast. The report was written before Hurricane Laura, so the devastation from Cameron Parish north is another factor lending some uncertainty to the future prospects of Louisiana businesses.
The big issue is when a swoosh will help us.
Scott and co-author Greg Upton of the LSU Center for Energy Studies see the Baton Rouge area as the only region of the state projected to recover all its job losses by 2022. Other key regions like Lafayette and New Orleans will see jobs increase, but not enough to recover fully until the next year.
The largest market in the state, the New Orleans area had 583,400 jobs at the end of 2019 and the number of jobs won't reach 2019 levels until 2023 or later, the new report said.
While metro New Orleans is obviously badly hurt in employment in the tourism sectors of the economy, more general business interests are affected: a worldwide slowdown in demand, for everything from crude oil and natural gas to petrochemical products delays recovery along the Mississippi River corridor from Baton Rouge to other parishes along the river.
Scott and Upton are well-informed on industrial construction and the petrochemical industry in Louisiana, and those jobs are high-paying and sough-after. But with many plants delaying turnarounds and other maintenance projects, and demand for products from plastics to jet fuel down, industrial construction is not the job producer that it was. By April, employment in the construction industry in the Baton Rouge area was down by 9,800 jobs, or 19.1%, according to state data.
We are confident that many of these jobs will return and multibillion-dollar petrochemical plants will continue to be built along the Mississippi. But in the oil patch, it is oil and gas production jobs that are being lost in droves.
Some good news is the increasing diversification of the Lafayette economy, as “you’ve started to bring in industries that were not associated with oil and gas,” Scott told a One Acadiana audience. “I’m at least moderately hopeful that our oil price forecast will turn out to be too pessimistic.”
If so, that will turn out to be good news for Acadiana down to the Houma and Thibodaux areas.
Our communities, though, remain dependent on an economic recovery here and in the United States, as well as across the world: Rising demand will fuel a swoosh, but a sharp V-shaped recovery may be too much to hope for.