New Orleans Economy Trails Other Louisiana, Mississippi Communities in Hurricane Recovery; Forecast for 2007 Indicates 15,000 New Jobs across All Industry Sectors

Business Wire, Feb 21, 2006

NEW ORLEANS -- The New Orleans area's housing loss from Hurricane Katrina is causing the recovery effort to advance much more slowly there than in other Louisiana and Mississippi communities.

These are among findings by noted economist Dr. Loren C. Scott, who also reports that "more than 92 percent of the damage to 470,000 Gulf Coast homes in Louisiana was inflicted on houses in the New Orleans area, rendering more than 207,000 residents homeless."

The uncertainty about future flood plain requirements and questions about insurability have combined to slow the rebuilding process in New Orleans, Scott reports. For example, no building permits were issued in Orleans, St. Bernard and Plaquemines parishes between September 2005 and year-end.

Housing trends were among 13 key economic variables tracked in Scott's study, Advancing in the Aftermath: Tracking the Recovery from Katrina and Rita. Scott is professor emeritus of economics at Louisiana State University and president of Loren C. Scott & Associates, Inc.

The quarterly study by Scott was sponsored by Hibernia National Bank and Capital One Financial Corporation to provide a benchmark for the recovery of the hurricane-impacted regions of Louisiana, Mississippi and Texas. The full report is available at www.hibernia.com, www.capitalone.com and at www.lorencscottassociates.com.

Scott has made a separate forecast for 2007 that shows the New Orleans MSA will increase its employment by 15,000 jobs in various sectors. "This activity represents a larger annual increase than the area has experienced in recent history. Much of it will focus on new housing," he said.

Scott revealed that Katrina wiped out three decades of employment growth in the New Orleans area, which experienced a drop in non-farm employment of 198,100, or nearly 32 percent of its work force, from December 2004 to December 2005. This decline takes New Orleans-area employment levels back to where they were in 1975.

Greater New Orleans gained a seasonally adjusted total of almost 34,000 jobs from September 2005 to December 2005. Construction jobs are expected to grow continually through 2006, with much of that job growth attributed to expansion of the Ernest N. Morial Convention Center and construction of several $100-million-plus downtown projects.

Ten of the 12 hospitals in neighboring Jefferson Parish have reopened. However, the pace of reopenings has been slower in Orleans and St. Bernard parishes. Scott cites a severe shortage of medical professionals as a continuing problem in the region. It has been reported that Tulane University Hospital will reopen in February. Louisiana State University has announced that its medical, dental and nursing schools are committed to returning to New Orleans.

The casino industry suffered significant damage, but the recovery is under way, with brisk business reported by two reopened facilities - Boomtown and Treasure Chest casinos. Harrah's is also reopening its casino in downtown New Orleans in mid-February, according to Scott.

Only 184 of the 317 public schools in the New Orleans area reopened by the beginning of 2006, with most of the reopened schools located in Jefferson, St. Tammany, St. Charles and St. John the Baptist parishes.

Additional highlights of the Scott study include the following:

--Lake Charles was the only Louisiana metropolitan statistical area (MSA) in the path of Hurricane Rita. Just over 1,100 homes in this region were rendered uninhabitable. With the exception of sparsely populated Cameron Parish, this MSA managed to mostly avoid flooding. As a result, data on this market show it is experiencing the type of boom that occurs when large amounts of insurance and construction-rebuild spending are pumped into an area. The region's schools and hospitals reopened quickly, its manufacturing sector was repaired in short order and, with the exception of the number of open casinos, most economic indicators are showing a solid recovery. Employment in this MSA was actually up 3.7 percent from December 2004 to December 2005.

--The Biloxi-Gulfport, Miss., MSA was on the east side of the eye of Katrina and, as a result, bore the brunt of some of the storm's most serious winds and water surges. More than 98,000 homes were impacted by the storm, and nearly 61,000 were rendered uninhabitable. One difference between this MSA and the New Orleans MSA is that, while water surges destroyed thousands of homes along the Biloxi-Gulfport beachfront, floodwaters did not remain as they did in New Orleans. While Biloxi-Gulfport MSA employment remains more than 23 percent below its peak in 2005, all schools and hospitals have reopened, and most economic indicators are showing solid recovery trends. The one exception is the broadly designated hospitality industry. New legislation allows the area's large casino industry to rebuild on land rather than on riverboats. This rebuilding process will take longer than simply restoring or reconstructing the original facilities, but the industry will have a larger presence and overall economic impact when the new casinos are completed.