That Silver Lining
business outlook is partly cloudy
If making a resolution to improve the local economy had any real potential, now would be a good time to make the commitment.
Forecasters say that local business growth could hover at a brink between positive and negative territory during the coming year, and any nudge could make a difference.
The New Orleans region, the state’s largest metropolitan area, will see “meager growth” in 2016 if current trends continue unabated, says Loren Scott, one of the state’s leading economists.
Scott, who annually teams with fellow Louisiana State University professor James Richardson to present an economic outlook for Louisiana, says the local area may add 2,900 jobs this year, which translates to a growth rate of just a half-percent.
In 2017, the New Orleans area will add 5,100 jobs, economists say.
Key factors that will affect job growth this year include an expected decline in federal investment as the bonanza of spending by the U.S. Army Corps of Engineers, which helped buoy the city during the past decade, peters out.
That decline, says economists, along with layoffs in the energy sector stemming from low oil prices, will largely offset employment gains in other areas.
New Orleans is still home to thousands of people who work in office jobs related to the oil and gas industry. And layoffs by Shell, with more than 2,300 employees and contractors in One Shell Square, and Chevron, with 720 workers in Covington, could produce some pain.
Shell is thought to be planning a cut of as much as 30 percent of its local work force, and Chevron has tabled a previously planned expansion at its Northshore site.
In addition, job hits lie ahead in some other sectors:
• Jacobs Technology, the company that operates NASA’s Michoud Assembly Facility in eastern New Orleans, will cut about 200 of its workers after failing to win renewal of its NASA contract.
• Renaissance Rx suspended plans for adding 425 employees to a new headquarters in New Orleans.
• The Times-Picayune will close its print facility, laying off 100 workers.
• Harrah’s Casino may look to reduce its minimum employment by 500 to 600 workers.
As for the New Orleans area, Scott notes that despite economic advances during the past decade, local employment remains nearly 10 percent below its pre-Hurricane Katrina peak.
But the area’s underlying strength is evident in the fact that it achieved that employment level despite losing 4,500 jobs at Huntington Avondale Shipyard.
Now, after six years of construction work, the university medical complex has begun operating its new 424-bed downtown hospital that will add an estimated 1,110 jobs to the region.
And the new Veteran’s Administration Hospital is scheduled to open soon right next door.
Meanwhile, Oschner Foundation Hospital is undertaking a $250 million expansion that will add six floors to its west tower.
These health care additions will be a big help in countering energy job losses, Scott says, adding that New Orleans “is poised to enjoy a major employment boost in a sector that is also high-wage.”
In addition, an $826 million expansion is on tap at the airport, along with nearly $1 billion worth of condominium construction within the city.
The initial portions of the four-phase South Market District development are leased up, and construction has begun on additional downtown apartments, retail, condos and a hotel renovation.
Four Seasons plans a $364 million renovation at the World Trade Center, and several other hotel and condo projects are moving toward construction.
Scott also says it’s possible that the greater New Orleans area could see much stronger growth than his forecast indicates.
Some $24.6 billion in expansions and new construction in the petrochemical sector have been announced for the region upriver from the state’s largest city, and many of these projects now are in the design or permitting stages, with help from New Orleans engineers and architects.
If most of these projects “go vertical” over the next two years, the jobs forecast for the region will be much brighter, Scott says.
The economists also emphasize that the expected slowing of job growth across Louisiana will not completely unwind the substantial progress the state has made in recent years.
“If our forecasts are near the mark,” Scott says, “Louisiana soon will have more than 2 million non-farm employees for the first time in the state’s history.”
The New Orleans metropolitan statistical area is the largest in the state and is composed of Orleans, Jefferson, St. Bernard, Plaquemines, St. Tammany, St. Charles, St. John the Baptist and St. James parishes.
Employment here is now about 563,700, about 38 percent larger than the Baton Rouge area.
The local port system ranks among the largest in the world in terms of tonnage moved.
The city is home to several universities, the largest being the University of New Orleans and Tulane University.
New Orleans is a tourism magnet, drawing more than 9 million visitors last year.
Economists Scott and Richardson say low energy prices will stunt job growth statewide over the next two years, but the continuing development of big industrial projects will help drive job gains, particularly in the Baton Rouge and Lake Charles areas.
“We have never seen an industrial expansion like the one underway” around Baton Rouge, Scott says.
He and Richardson predict that the state will add 15,400 jobs in 2016 and 19,600 in ’17.
“Normally these numbers would be a lot better except for what’s going on in the oil patch,” Scott says.
He predicts a “modest recovery” in oil prices, which recently have languished in the low $40s, to an average of $55 a barrel in 2016 and $60 a barrel in ’17