Employment statistics, sales tax collections, large construction projects and other key economic indicators point to an accelerating recovery in many Gulf Coast communities damaged by hurricanes Katrina and Rita in 2005.
Economic growth driven by construction and manufacturing in Pascagoula, Miss., and Lake Charles, La., parallels the aggressive recovery patterns that most regions encounter following a major natural disaster. Yet despite these improvements, the economic impact of Hurricanes Katrina and Rita continued to negatively affect key cities in the Gulf Coast region through the second quarter of 2006.
Floodwaters from Hurricane Katrina, widespread lack of flood insurance and the ensuing slow-paced development of programs to aid housing repair or replacement are key reasons for slower recovery in two parishes, Orleans and St. Bernard.
These results are reported in "Advancing in the Aftermath III: Tracking the Recovery from Katrina and Rita," a study by noted economist Dr. Loren C. Scott and sponsored by Capital One, N.A.
Construction helps drive recovery
Economic recovery is accelerating in heavily damaged Biloxi-Gulfport, Miss., where programs have been implemented to assist homeowners and businesses rebuild. By contrast, planning such aid programs took much longer in the New Orleans area, where flood waters that lingered for weeks heavily damaged large portions of Orleans and St. Bernard parishes. Residential grant programs in those areas were only recently finalized and the distribution of funds is just beginning in New Orleans.
"Much of the recovery to date has been driven by construction in communities where money is available for repair and replacement of damaged structures and housing is available to accommodate an expanding work force," Scott said.
On Mississippi's Gulf Coast, Scott pointed to casinos in Biloxi-Gulfport and shipbuilding in Pascagoula as examples of progress. Scott said that legislation allowing casinos to be built along the shore rather than on the water and Gulf Opportunity Zone assistance programs provide strong incentives to accelerate rebuilding and new casino developments.
"In the Lake Charles area, where there was storm damage but little flooding from Hurricane Rita, the construction and manufacturing sectors are moving ahead and creating positive results for the local economy," Scott explained.
The report also cites University of New Orleans research findings that construction projects in the New Orleans area which would normally provide 28 years-worth of building activity are currently scheduled for completion in just the next few years.
"Rebuilding public schools and other institutions is another example of how construction leads recovery," Scott said. "But housing for the work force is still an issue that must be resolved before construction can take economic recovery to the next level."
Overall, the report states that large industries and manufacturers, including shipbuilding operations and ports, have recovered faster than small businesses. For example, in Pascagoula, Northrop Grumman's Ingalls Shipyard has new Navy contracts, and its total employment is just 1,000 jobs short of its pre-Katrina employment peak of 13,000.
The quarterly economic study by Scott attempts to benchmark the recovery of the hurricane-impacted regions of Louisiana and Mississippi. The full report is available at www.lorenscottassociates.com. Scott is professor emeritus of economics at Louisiana State University and president of Loren C. Scott & Associates, Inc.