The Acadiana economy appears to have hit a turning point in its recovery from years of record-low oil prices that sets the stage for growth over the next two years.
Last year, an annual economic outlook conducted by economist Loren Scott predicted that Lafayette would only add 1,400 jobs in 2019 but the region has gained 2,500. It’s a major change from when the region was bleeding jobs — 20,900 lost between 2015 and 2017. This year’s report was co-authored by Gregory Upton Jr., assistant professor and researcher at the LSU Center for Energy Studies.
In 2020, Lafayette is projected to add 3,200 new jobs, or 1.6%, and another 4,000 jobs, or 1.9%, in 2021 in the latest forecast. Overall, Louisiana is expected to add 24,700 jobs, or 1.2%, in 2020 and another 28,800 jobs, or 1.4% in 2021. Eight of the state’s nine metro areas show growth, with Alexandria projected to be flat. By contrast, a survey of professional forecasters conducted by the Federal Reserve of Philadelphia projected nonfarm employment to grow by only 1.52% in 2019 and 1.12% in 2020 — but did not project out to 2021.
Scott will deliver his 2020 outlook Wednesday in Lafayette at an event sponsored by One Acadiana.
There are three factors that are difficult to factor into the forecast, Scott said: the possible impact of the U.S. trade war with China, whether rig counts have already hit rock bottom and how much of an impact the attacks on oil processing facilities in Saudi Arabia may trickle down to the Gulf Coast.
Most of the bullish forecast hinges on a stronger oil and gas industry because about 6.2% of all jobs in Lafayette are directly tied to oil exploration compared to 1.8% as the state average.
And there has been some uptick in the oil and gas industry. There were 23 oil rigs in the Gulf of Mexico during the week of Sept. 18, up from only 18 oil rigs in the Gulf one year ago — an increase of nearly 28%.
It’s hardly a booming economy, though. The price of Louisiana sweet crude was selling for about $97 per barrel in 2014. At the time there were more than 60 oil rigs in the Gulf. Still, the forecast is cautious but optimistic.
“We have not received a lot of reassurance that a significant inflection point has been reached,” Scott said. “We are forecasting that the Gulf of Mexico is on the cusp of recovery.”
Scott predicts that the offshore oil rig count will grow to between 33 and 35 in the next two years. Much of the optimism is drawn from technological innovations that have driven down production costs significantly so companies can still break even when oil is selling for $30 per barrel.
But two other economists are wary about such an optimistic forecast while a third concurs with some of the findings.