The Economics & Policy Research Group of the LSU College of Business has just published the Louisiana Economic Outlook for 2019/2020 prepared by Loren C. Scott, professor emeritus in economics.
Scott notes that after a 28-month recession that cost Louisiana over 23,000 jobs, the state’s economy began to grow in 2018. He predicts that an industrial boom and a revived oil and gas industry should produce a recovery from the 2015-2017 recession, with a particularly strong 2020.
Scott’s outlook is based on 4 assumptions:
a. the national economy will expand at a healthy rate;
b. inflation and interest rates will rise slightly but not be harmful;
c. oil prices will rise gradually from $65 per barrel this year to $80 next year;
d. natural gas prices will decline slightly and continue to fuel an industrial boom.
The Shreveport Metropolitan Statistical Area (MSA) is the fourth largest in the state with an estimated 180,000 non-farm job in 2018. It is comprised of Caddo, Bossier, Webster, and Desoto parishes.
Scott predicts that the Shreveport MSA will return to a positive, modest growth mode over the next two years. This after a job loss of almost 13,000 from a 2008 peak.
Scott projects an addition 600 jobs this year which is an annual growth rate of .3%. This is the lowest projected rate of the state’s 9 MSAs. Scott notes that activity at the Port of Shreveport-Bossier and the tech facility CSRA are bright spots, but the region suffers from a lack of major job announcements for the next two years.
Scott notes that Shreveport Bossier has the highest concentration of durable goods manufacturing in the state. This makes this area much more susceptible to national recessions than the other 8 MSAs.
Shreveport-Bossier is home of the state’s largest and most successful casino market. The 6 river boat casinos and Harrah’s Racetrack employ over 5000 people
Barksdale Air Force Base has over 9000 military/civilian workers. It s a major economic driver for this area.
The LSU Health Science Center has over 5200 employees.
A key variable for this MSA is the Haynesville Shale rig count. After peaking at 142 in April 2010, the count plummeted to 15 in June 2016. The rig count has nearly doubled to the 35 range. The $64 question is will the LNG and chemical projects in the southern part of the state up the demand for Haynesville gas when they come on line.
The return on equity(ROE) of the Haynesville play is the primary reason for it decline.
This is due to two factors.
The Haynesville wells are deeper than other plays, resulting in a typical cost of $9.3 million per well versus $6 million in the Eagle, Ford or Marcellus Plays. Also, the Haynesville Shale is a "dry"play, only producing natural gas. The competing plays have both natural gas and oil, which is more highly priced.
Another uncertain factor is continual decline in casino revenues which is due in large part to the Indian casinos in Oklahoma. Its not a question of it, but only how much the decline will continue. Add to this the Arkansas casinos, and especially at Oaklawn, which is advertising in Shreveport for casino workers.
It is very unlikely that the local market will continue to have these many gaming venues. DiamondJack casino made overtures to move its license to Tangipahoa Parish, but legislative authorization died in the senate.
The only significant job growth is the growth spurt of CSRA,, formerly General Dynamics IT and the arrival of Glovis American.
The MSA’s largest employer–Barksdale AFB–should stay relatively stable over 2019-2020.
A $21 million Communications Squadron complex in the planning stages and construction should start in 2019/2020. And construction has started on the I-220 road into the base.
State road spending will also help the local economy. The biggest project is $28.1 million to replace the US80 Red River bridge. A new alignment for Swan Lake Road will be constructed at a cost of $14.2 million.
The award of a Choice Neighborhood Grant to Shreveport of $24.2 million will upgrade 3 neighborhoods and part of Shreveport’s downtown.
Western Global Airlines is moving into the Express Jet facility with an aircraft maintenance plant at the Shreveport airport. The company will make a $3 million investment in Hanger 40. Employment should increase from 25 to 275 by the end of 2020.
Alorica is a new firm to this area. It is a back office support and customer relations management firm that uses part-time, work-at-home employees. It is estimated that 500 people will be hired.
Scott concludes that the good news for the Shreveport MSA economic outlook is that it will expand over the next two years. The not so great news is that this trend will only be modest at best.