1012 Corridor

When talk of a national recession started making headlines about a year ago, 
prevailing wisdom in these parts was that communities along the 10/12 corridor—
particularly Baton Rouge and New Orleans—would remain largely unaffected. Louisiana demographer and political analyst Elliott Stonecipher begged to differ.

“I kept hearing that we had so much hurricane rebuilding money we were not going to suffer like other states,” Stonecipher says. “I never bought into that theory.”

One year later, statistics suggest Stonecipher, not the prevailing wisdom, was correct. While the corridor economy remains the healthiest in the state—and Louisiana is, at this point, faring better than other states—the boom days of growth along the 10/12 corridor have definitely slowed.

“It’s still high growth compared to rest of the state,” says LSU Economist Jim Richardson. “But that’s not saying a lot.”

One need not look past the latest Census 
estimates for proof of the slowdown. According to the U.S. Census Bureau’s latest estimates, growth in the 17 corridor parishes slowed to an average of less than 1% between 2007 and 2008. While that’s not alarming, it’s not particularly comforting, either.

Elliott Stonecipher

What is troubling is that the 1% average figure includes Orleans Parish, which grew a whopping 8% last year by gaining more than 23,000 residents, according to the Census Bureau data. But some have real questions about the accuracy of those numbers. That’s because the bureau revised upward its estimates for New Orleans after Mayor Ray Nagin filed a formal complaint last year, accusing the bureau of undercounting the area’s residents. When Orleans parish is taken out of the mix, the 16 remaining parishes gained just 7,600 residents, less than a tenth of a percent.

What’s more, some of the high-growth parishes of the corridor in the immediate aftermath of Katrina, namely East Baton Rouge and the three river parishes—St. Charles, St. James and St. John—all lost population. Baton Rouge was down about a half of 1%, while the other three were each down slightly more, even, than that.

Stonecipher questions the veracity of the Orleans parish numbers, attributing much of the new data to political tricks. As he points out, the upward revision was made when the Census Bureau accepted utility hook-up data, mailbox counts, and the like, from Orleans Parish, data it hasn’t previously accepted as valid. There are also questions about whether temporary recovery workers were included in the revisions.

“When we know we’re ramping up to congressional reapportionment and state legislative redistricting, when we know how much opposition there is in New Orleans to a ‘smaller footprint’ of the city, and when we know a lot of work has gone into NOT disclosing any details about this ‘revision’ process, all of my alarms are going off,” Stonecipher says.

Leaving questions of Orleans Parish aside, there were some bright spots along the corridor, namely Lafayette, St. Tammany and Tangipahoa parishes, all of which were up more than 1%; Ascension Parish, up 2.2%; and Livingston Parish, up 3.3%.

“In comparison to anything else in the state the corridor is still smoking,” Stonecipher says. “But the pace is definitely slowing.”

Jim Richardson

Home sale data along the corridor also 
supports the slowdown in activity. From January 2007 until January 2009, sales volume fell by 45% in New Orleans and the Northshore, by 32% in metro Baton Rouge, by 38% in the Lafayette area and by 44% in the Lake Charles region.

Sales prices during the same period were also down, though not by nearly as much as the 10% national average. In New Orleans and the Northshore, they were down less than 5%, about the same as in metro Baton Rouge. In the Lafayette region, they declined just 3%, while in Lake Charles they dropped 8% on average.

Unemployment statistics for the corridor region are more troubling. Between January 2007 and December 2008, unemployment in the 17 corridor parishes increased from 4.3% to 5.5%, a jump of 28%. That still puts the corridor’s average unemployment rate well below the latest national average, but some parishes are faring a lot better than others.

Orleans Parish, for instance, saw its unemployment rate rise to nearly 8% at the end of last year, while St. James approached 9%. Iberville parish, west of Baton Rouge, is also high at 7.7%, while Tangipahoa on the Northshore and St. John in the River parishes both have surprisingly high rates of more than 6.5%.

On the other hand, unemployment in Lafayette is still way below the national average at just 3.6%. Several other corridor parishes are hovering in the range of between 4% and 5%. Economists, however, don’t expect those figures to stay low for long.

“These areas are doing better than the national average by a large margin,” says economist Loren Scott. “But I think that what’s going to happen is that you’re getting ready to see the employment numbers go negative now for a few reasons.”

Susan Bonnett

The first has to do with national economic data, specifically the gross domestic product. Earlier this year, the feds announced the GDP fell by 6.2% last year—a significantly sharper drop than the 3.8% by which it was originally estimated to have fallen. Scott says a decrease of that magnitude is bound to have an effect on the Louisiana economy, including the corridor.

A second reason for Scott’s concern is the U.S. Department of Labor’s recently released mass layoffs report, which charts the number of firms that lay off 50 or more employees. In January, mass layoffs occurred at 29 Louisiana businesses, compared to just seven in January of 2008. Says Scott: “That’s a massive spike.”

Then there’s the fact that chemical companies are starting to suggest they may have to lay off employees as well, which would hit the Baton Rouge and Lake Charles areas particularly hard.

The bottom line is this, Scott says: “There’s no part of Louisiana that can escape this. It applies to all of the state, including the corridor.”

What’s adding to the slowdown is the fact that the post-Katrina bubble is coming to its natural end. Many of the flood victims who moved from St. Bernard or Plaquemines parishes to the corridor have returned home. They’ve also stopped spending on construction and big-ticket items like furniture and appliances.

“That post-Katrina spending spree is finally at an end,” says James Hartman of the St. Tammany Economic Development 
Foundation. “But this is not unexpected. It has 

been gradually slowing.”

Still, economist and corridor advocates are quick to point out that while the boom may be over, the area is healthy relative not only to the rest of the state, but to the rest of the country.

“The housing market has slowed down, certainly, and the commercial building surge that we saw post Katrina has slowed, certainly,” says Susan Bonnett at the Northshore Foundation. “But we haven’t seen any real measurable impact between what’s happening nationally and in this region.”

Indeed Richardson says the economy is a setback that may keep the corridor from growing as rapidly as it otherwise would have. But he insists the region as a whole is still a good bet, and the promotion of it from an economic development perspective is a worthy long-term project.

Stonecipher is more circumspect. The corridor may be a good bet, he agrees, but wonders whether it can succeed when the state as a whole is so troubled.

“We are still the lowest-ranked state in the nation with a negative 1.3% population loss decade to decade,” he says. “The steady rapid voice of people voting ‘no’ with their feet is crushing us.”