Difficult to believe, but the 15th anniversary of the landfall of Hurricane Katrina reminds us that Louisiana has faced not one but four world-shaking events during this century.
The others? The so-called Great Recession, the collapse of the stock markets and economy, that also occurred in the administration of President George W. Bush, then the 2010 oil spill in the Gulf of Mexico, and the coronavirus pandemic, still with us.
The latter is shaping, and shaking, our economic futures in profound ways. One of the basic metrics is supplied by economist Gary Wagner, of the University of Louisiana at Lafayette: Total jobs dropped by 11% in the first half of this year, nearly double the jobs lost because of hurricanes Katrina and Rita in 2005.
The dual storms in 2005 in their impact eclipsed our highly cyclical experience with the oil and gas industry, although the oil bust of the mid-1980s drove unemployment up to around the current 13%.
What are the differences in these major events? Human failings contributed, we know, to three of them: The collapse of the federally built levee system around metro New Orleans led to massive flooding and loss of life and property. A boom and loose credit standards, another human failing, led to the biggest market crashes since the 1930s. Errors on the Deepwater Horizon killed 11 workers, as well as hit our environment.
Nobody’s sure if the coronavirus outbreak was the direct fault of the Chinese government but it certainly appears that the corrupt Chinese system may have contributed, as local officials were reluctant to report to higher authority, according to a new U.S. study.
But both Katrina and the coronavirus are at least in major parts acts of God, and the questions before us now involve what to do about our latest challenge.
Wagner’s forecast of Louisiana’s economic activity says a national full recovery is not projected until likely 2022. In Louisiana, he noted, that recovery will be slower.
“Louisiana’s (GDP) contraction of 6.6% was one of the sharpest drops in the nation,” he wrote in the quarterly Louisiana Economic Activity Forecast. “Only Michigan, New York, Nevada and Hawaii experienced larger downturns in economic activity.”
An important economic difference: Louisiana was buoyed in 2005 and later by insurance payments, allowing thousands of families to repair their homes and buy refrigerators and other big household purchases, particularly in New Orleans.
There will be no such upside of the coronavirus recession. In fact, there is an inability of Congress to agree on even basic extensions of unemployment relief.
In statistics collected by the Baton Rouge Area Chamber, consumer spending was down but not as dramatically as expected, because of the original relief bill. Without that, consumer spending will take a hit everywhere.
Recovery is our goal but with households stressed as they are, consumer spending is not now poised to help.