Louisiana Economy Forecasting Model

 

 

 

Although there was some growth in employment from 2000-2014, interrupted briefly by the effects of Hurricanes Katrina and Rita, employment has stagnated since 2014. Employment fell sharply in response to the pandemic but has rebounded in the last three years towards the pre-pandemic level. The model forecasts continuing increases over the current and next three quarters, essentially reaching the pre-pandemic level by the end of the forecast period.  

 

 

Although the Louisiana unemployment rate has drifted down since 2010, the downward drift was dramatically interrupted during the pandemic. Post-pandemic, the unemployment rate fell below its pre-pandemic level but has risen slightly since early 2022 and is forecast to continue to rise very slightly over the current and next three quarters.

 

 

 

Although the story of the Louisiana economy told by non-farm employment is basically one of stagnation, the story told by real GSP (the total volume of goods and services produced within Louisiana) is more like a tragedy. Real GSP drifted downward from 2005-2020, fell sharply during the pandemic, and rebounded by a relatively small amount after the pandemic lockdown was lifted, but has stagnated since then at a level well below the pre-pandemic level. The weak rebound and stagnation reflect in part the travails of the oil and gas industry in recent years. Real GSP is forecast to rise slightly by the end of the current and subsequent three quarters.      

 

 

 

The all-transactions Louisiana house price index rose substantially from 2000-2007 but leveled off until 2014, when it began to rise slowly. The increase in house prices accelerated in line with national house price indices with the spread of remote work after the pandemic and low mortgage interest rates, but the index peaked in 2022 and has begun to decline as the Federal Reserve tightened monetary policy and mortgage rates rose. The decline in the index is forecast to continue in this quarter and the subsequent three quarters.

 

 

 

From 2004-2008, the Alexandria metro area added approximately 7,000 workers, but employment since 2008 has declined, with a sharp pandemic-related drop. Employment then rebounded sharply and has risen in a series of steps above the immediate pre-pandemic period and is back to around the 2015-2016 level. The forecast is for employment to level off for the current and subsequent three quarters. This forecast is consistent with the behavior of Alexandria area employment post-pandemic: rise, level off, rise, level off, etc.       

 

 

 

Beginning in 2003 and except for 2007-2009, the Baton Rouge metro area has enjoyed solid growth. Employment in the Baton Rouge metro area has rebounded strongly from the pandemic-related plunge in employment and is now above the pre-pandemic peak. Employment is forecast to continue rising in the current quarter and the three subsequent quarters.

 

 

 

Employment in the Hammond metro area grew strongly through the end of 2007, but then experienced employment doldrums until 2014 when employment began to grow again, albeit at a slower pace than from 2000-2007. Following the pandemic-related plunge, employment grew off and on and is now above the pre-pandemic peak. Growth since the pandemic has been characterized by a spurt followed by a leveling off for a brief period, then another spurt with another leveling off, and then another spurt. Consequently, it is not too surprising that the model forecasts a leveling off for the current and next three quarters.    

 

 

 

Employment in the Houma-Thibodaux metro area increased substantially, but erratically, from 2000-2015. It then declined sharply through late 2016 and leveled off until the pandemic. The employment response post-pandemic has been quite erratic and has not regained the pre-pandemic level. Employment is forecast to rise only slightly in the current and three subsequent quarters.  

 

 

 

The behavior of employment in the Lafayette metro area is, not surprisingly, given the importance of the oil and gas industry to both metro areas, similar to that of Houma-Thibodaux up to the pandemic: substantial but erratic growth from 2000-2015, followed by a sharp decline and leveling off. Post-pandemic employment in the Lafayette metro area rebounded more strongly than in the Houma-Thibodaux metro area and is only slightly below the pre-pandemic level. The forecast is for a slight decline (essentially a leveling-off) for the current and next three quarters.  

 

 

 

Employment in the Lake Charles metro area was stagnant from 2000-2011, after which it exhibited spectacular growth related to LNG and aviation projects and expansion of the gaming industry. After reaching a peak in early 2018, employment began declining and plunged sharply because of the pandemic and back-to-back hurricanes that hit the area. Employment has rebounded slowly post-pandemic and is forecast to grow weakly in the current and next three quarters.

 

 

 

Employment in the Monroe metro area was of similar magnitude just before the pandemic to what it was in 2000. The intervening period was characterized by some growth at the beginning of the period, a slow decline, and a slow rise to the pandemic. The post-pandemic rebound has been relatively strong, and employment is now back at the level it was just before the pandemic. For the current and next three quarters, employment is forecast to dip slightly and then rebound slightly, resulting in essentially no net change in employment.

 

 

 

Employment in the New Orleans-Metairie metro area declined slightly pre-Katrina but collapsed after Katrina. It slowly recovered post-Katrina but never returned to the pre-Katrina level before the pandemic hit. Employment has grown steadily post-pandemic and is forecast to get back close to the pre-pandemic level by the end of the second quarter of 2024.  

 

 

 

After slow growth from 2003-2007, employment in the Shreveport-Bossier City metro area began a slow decline with employment just before the pandemic less than the year 2000 level. The post-pandemic rebound has been steady, but the forecast is for employment for the current and next three quarters to remain essentially the same as the second quarter of 2023.