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Recovery from the COVID pandemic recession has stalled and Louisiana is currently ranked 50th in the country in cumulative job recovery, according to Dr. Gary Wagner.
The University of Louisiana B.I. Moody III College of Business Administration Acadiana Business Economist and BORSF Eminent Scholar Endowed Chair in Economics, Wagner addressed the Acadia Parish Chamber of Commerce Quarterly Luncheon, saying the recent pandemic recession was “twice as bad as the 2008 recession.”
Employment dropped by 14%. It’s back to about -2.3% nationally; -8.7% across Louisiana; and about -7% in the Acadiana area.
But that last figure is deception, Wagner said. “Actually, we’re at about -14% because we still haven’t fully recovered from 2014 when oil prices plummeted.
“Job growth in Louisiana started to stall at the beginning of 2021 and tanked with Hurricane Ida,” he said.
Retail trade, he said, has seen the largest job growth, with a 70% recovery while manufacturing is still at -96% employment.
“In total, we’ve only gained back about 38% of the jobs that we lost” to COVID, Wagner said, adding that the education and health services fields appear to be the areas of key growth for the future.
But, despite the lost jobs, retail sales have increased, he noted.
“I think that’s because of the increase in the amount of unemployment benefits and the COVID payments,” Wagner said.
He explained that the state has seen a “significant” jump in gambling and in people purchasing Bitcoin since COVID. “That tells me that the payments were not targeted really well.”
Inflation is also a concern, according to Wagner.
“Inflation on goods is about 10 times higher than normal. Usually, the cost of goods increases about 0.6% due to inflation. It’s now at 6.1%,” he said.
Inflation rates nationally are usually in the 1.9% range. It’s now 4.2%, Wagner said.
“I’m concerned about inflation persisting for a while,” he said. “The Fed will have to raise interest rates to fight inflation and what that’s going to do is make borrowing money – for a car, for a house, anything – more expensive.
“The variability of inflation is what troubles me most,” he continued.” If the inflation rate is 2% annually, you can plan for that. If it’s 10% annually, you can plan for that. What’s troubling is when its 2% then 8% then 4% then 10% -- that’s hard to plan for.”
The labor market is more of a puzzle than a concern, according to the economist.
“Nationwide, there are about 1.2 job openings for every person. That means that everyone could start working today and we would still have open jobs,” he said. “That’s the biggest puzzle for me. I don’t have a good explanation as to why this is happening.”
Labor force participation rates remain low at 61.6% across the county and 57.7% in Louisiana.
“Most of the variation is on the female side, especially in the South,” Wagner said. “The COVID recession really hammered women, who were forced to drop out of the labor force to care for out-of-school children.”
And the number of people simply exiting the labor market remains above normal with an estimated 90,000 not working or looking for work in Louisiana.
“That puts the national unemployment rate reports way off,” he said. “The U.S. Department of Labor says the unemployment rate is 5.8%. But if we use the numbers we were using prior to the pandemic, I put the unemployment rate at 9.7%.”
Asked about the future of the oil and gas industry in the state, Wagner pointed out that only 1.1% of the state’s economy is currently reliant on oil and gas. “Back in the 80s, it was 35.5%,” he said.
“I think we should start looking more closely at renewable energy because I don’t see the oil and gas industry roaring back in Louisiana.”
The Acadia Chamber will next host Business Over Breakfast Thursday morning at SLCC.