The struggling Lafayette economy, which has shed thousands of jobs from an oil-driven recession, will “turn the corner” in 2019 and move into a relatively strong growth period according to Dr. Loren Scott during his economic outlook speech Wednesday morning.
Outlining his annual Louisiana Economic Outlook report for the audience of Acadiana business leaders on Wednesday morning, Scott said rising oil prices — now above $70 per barrel — are expected to hit $80 by 2020, meaning “hope lies ahead” for the Lafayette area. Scott also predicts the Lafayette region will add 1,400 jobs, or 0.7 percent in 2019, and a stronger 4,900 jobs, or 2.4 percent, in 2020.
“A reviving energy sector will make 2018 a ‘trough’ year and 2019 will be the beginnings of a very solid recovery for Lafayette,” Scott said.
Statewide, Louisiana has recovered from its 28-month recession and is expected to add 23,400 jobs, up 1.2 percent, in 2019 and 36,100 jobs, up 1.8 percent, in 2020. The state is now in “relatively healthy growth mode,” Scott said.
But those projections depend on oil prices rising to $80 a barrel and a national economic expansion continuing. Low natural gas prices, which have fueled industrial expansions in Louisiana in recent years, should continue a modest decline.
Threats like President Donald Trump's administration’s ongoing trade war with China could be “devastating” to the economy if tariffs continue in the long term, Scott said.
"The biggest major threat to all of this is the tariffs that President Trump has put into place," he said. "Economists are very, very concerned about this. Our forecasts are based on this being just a negotiating gambit and there's indications that this is the case.
"Because if this is just the president and his trade representatives saying, 'We need to protect our domestic industry from foreign competition,' then we're going to see in late 2019 and 2020 a recession way worse than what we experienced in 2008 and 2009. We're going to have a trade war that's going to be very bad across the world."
During the period 2015 to 2018, Lafayette will be down an estimated 21,600 jobs, or 10 percent, compared to 2014, Scott said. The area has the highest concentration — 6.8 percent — of its jobs directly from the exploration sector among Louisiana’s nine metro regions. The state average is 1.7 percent.
However, the Lafayette region’s “big six” — jewelry maker Stuller Inc., Acadian Ambulance, health care consultant Schumacher Group, home nursing giant LHC Group, delivery service Waitr and tech firm CGI — will continue providing stability to the area’s economy. CGI is expected to double its workforce in Lafayette as part of a deal announced earlier this year.
Scott also said that there will be big news soon of a new business coming to the area that will make it the region's "big seven" and create around 400 high paying new jobs, but he couldn't go in to any more details.
If oil prices beget a resurgence of drilling activity in the Gulf of Mexico, energy companies in Lafayette project expansions. The Port of Iberia and Acadiana Airport are expected to see some job growth from existing tenants.
Public roads and airports also are expected to bring some economic activity, Scott said. Demolition for a $90 million expansion of the Lafayette Regional Airport to double the size of the terminal have started. About $234 million in new state road project bid openings will come over the next two years, including $101 million to widen Interstate 10.
As of July, Louisiana was already adding jobs at a 26,000-a-year rate, or 1.3 percent, which is about the national average. In 2020, several large industrial projects, including liquefied natural gas export terminals, are expected to make final investment decisions. Rising oil prices should lift the state’s energy sector, Scott predicted.
Here’s the outlook for the state’s other metro areas:
NEW ORLEANS: Industrial megaprojects in places like St. James and Plaquemines parishes, as well as job infusions from the tech sector, will drive growth in the region. New Orleans is expected to add 6,500 jobs, up 1.1 percent, in 2019 and 9,100 jobs, up 1.6 percent, in 2020. In 2018, the region began to grow again, adding 3,500 jobs, or 0.8 percent, below Scott’s previous forecast. Scott projects the region will rank seventh out of Louisiana’s nine metro areas in percentage job growth.
BATON ROUGE: A brief lull in industrial construction is over and the capital region will add 6,000 jobs, or 1.5 percent, in 2019 and 8,100 jobs, or 1.9 percent, in 2020. The region is expected to post the second-highest job growth in the state, aided by big petrochemical expansions and public construction projects. “Clearly, the lull is over and a new burst of activity is at hand,” Scott said.
LAKE CHARLES: The Lake Charles area was the fastest-growing in the country over the past five years, Scott said, on the back of an “unheard of” $117 billion in projects announced since 2012. As of June, nearly a quarter of Lake Charles’ workforce were construction jobs. Three LNG export facilities are expected next year, and Lake Charles will continue to be the fastest-growing metro area in the state. Scott projects it will add 4,000 jobs, up 3.3 percent, in 2019 and 5,300 jobs, up 4.3 percent, in 2020.
HOUMA-THIBODAUX: After experiencing a severe oil-driven downturn in recent years, “the corner appears to have turned in the Houma MSA,” Scott said. Fabricators and shipbuilders are starting to find non-extraction clients, and an oil price of $80 a barrel should bring a “serious revival” in Gulf drilling by 2020. In 2019, Houma is expected to add 700 jobs, or 0.8 percent. In 2020, that growth will ramp up to 2,100 jobs, or 2.4 percent, Scott said.
HAMMOND: Avoiding major budget cuts to Southeastern Louisiana University spells a “positive future” for the Hammond area in the next two years. The region is expected to add 800 jobs, or 1.7 percent, in both 2019 and 2020.
SHREVEPORT-BOSSIER: After falling well below its 2008 employment peak, the region will return to a “positive though modest” growth trend over the next two years, Scott said. Activity at the area’s port and in technology will help add 600 jobs, or 0.3 percent, in both 2019 and 2020.
MONROE: Major area employers like IBM, Graphics Packaging and Vantage Health Plan will provide stability, but Scott “remains concerned” about the Monroe area. The future of CenturyLink after a merger is a source of concern, Scott said. The area is projected to add 400 jobs, 0.5 percent, in 2019 and 200 jobs, 0.3 percent in 2020.
ALEXANDRIA: The region’s growth will be flat for the next two years, after a special two-year information technology project at Cleco ends and few announcements exist to take its place. Alexandria will remain flat in 2019 and add 500 jobs, 0.8 percent, in 2020, Scott predicts.