State economist Loren Scott told local business leaders that his economic projections show 4,000 more local jobs will be lost in 2017 before the economy levels out in 2018.
Scott, professor emeritus at Louisiana State University, gave his annual report this afternoon at the Cypress Columns in Gray. Last year he predicted the area would lose 2,000 jobs in 2016 then gain 1,000 in 2017. His predictions are now more pessimistic after 5,600 jobs were lost in 2016.
“You have lost 10 percent of your jobs in the last two years,” Scott said. “You have lost a total of 10,400 jobs. Percentage terms, you’re the worst-hit area of the state. In absolute terms you’re the second worst behind Lafayette.”
The losses Scott predicts next year amount to about 4.3 percent of all jobs held in Terrebonne and Lafourche parishes.
The state as a whole has lost 17,300 jobs this year. Scott expects that to flatten in 2017 and increase by 13,700 jobs in 2018.
Houma, Lafayette and Shreveport are struggling enough to offset the boom in growth from Baton Rouge and Lake Charles, he said. Those two areas are among the fastest-growing metropolitan areas in the country.
Employment drops are happening at shipyards across the Houma area. Scott said Edison Chouest laid off 1,600 from its shipyards and has 100 boats tied up. Others including LaShip, North American, Chett Morrison, Thoma-Sea, CHI Aviation, National Oilwell Varco, Offshore Specialty Fabricators and Hercules Offshore have also cut their workforces.
Bollinger, however, added 26 jobs in May and Chett Morrison and Thomas-Sea reported that they could soon add jobs for new projects, he said.
The local unemployment rate, the lowest in the nation at 2.8 percent in February 2014, is now 7.2 percent, one of the nation's worst.
The good news, however, is that he expects employment to trend upward in 2018. He referred to the 25 percent job loss that the area saw between 1982 and 1987 before employment rebounded.
Scott said the current slump should not happen again because investors are “smarter” now and won’t just shovel money into the oil and gas industry, which he said contributed to this decline.
For the area to come back, the Gulf of Mexico drilling needs to come back, Scott said. This year oil has cost $42 per barrel on average. He predicts that average will be $53 in 2017 and $60 in 2018.
If these predictions are right, he said, then those prices would be closer to the break even price of oil, which is now $55 to $60 per barrel. In 2014 this break even price was $70 to $80 per barrel, but it’s been reduced by exploration and service companies lowering well costs.
Last year Scott predicted an average of $55 a barrel in 2016 and $60 a barrel in 2017.
“The bottom line here is you can see that we are forecasting that unfortunately we think that it’s not going to be over in 2017,” Scott said. “There will still be more problems because you haven’t gotten back to that $55 to $60 per barrel range yet. So we’re expecting the decline rate to slow and then bottom out in 2018.”
Scott also said he is “disturbed” by what both presidential candidates have said against free trade, adding that restrictions would go against the basic economic law of comparative advantage. This law states that if barriers to trade are lowered between two countries, then the standard of living in both countries increases.
He briefly addressed the recent flooding that hit the state, noting that 110,000 homes got flooded and 19,900 businesses were affected. He did not, however, elaborate on how this could impact his economic recast.
- Writer Emma Discher can be reached at 448-7636 or email@example.com. Follow her on Twitter @emmadischer.
Posted on Tue, October 4, 2016
by By Emma Discher, Daily Comet Staff Writer