If financial markets, national and global, seem to be in constant turmoil, the real economy in the region centered around Baton Rouge is awash with good business news.
But with the unemployment rate at record lows and a broad-based recovery from the pandemic that began in March 2020 — not least in tourism, which rebounded to more than $1 billion in spending in 2022 — serious national policy obstacles remain.
The Advocate convened business leaders for its 2023 Economic Outlook Summit and examined some of the prospects for different types of growth, whether in general employment or industrial construction projects.
As Mayoral Chairwoman Sharon Weston Broome said, there has been “a huge change over the last few years”.
An understatement, of course, but coming off those years, business leaders surveyed by the Baton Rouge Area Chamber showed considerable optimism about employment. That outlook includes “the lowest unemployment rate on record for the Baton Rouge area, ever,” said BRAC’s Adam Knapp.
He also reported that the opening of new businesses is on the rise and that migration is coming to the region. However, the main category of emigration is those of graduation age, which is a key issue for businesses and the focus of the chamber’s work on employment.
At the same time, problems in the national economy are eating into a generally positive picture: Interest rates are hitting homebuilding, particularly the multifamily housing market, said Tom Delahaye, president and CEO of CST Multifamily Group.
“We talk about interest every day,” added Ginger Laurent, executive director of the Louisiana Bankers Association.
Laurent said its members are optimistic that customers will continue to be willing to take out loans. However, these clients are moving cautiously as interest rate uncertainty remains.
“I think the capital is there, but I think we’re going to see movement just a little bit slower just to make sure all the questions are answered before they move forward with new activity or expansion,” she said.
Construction costs are a problem, whether in business or in new roads and bridges — vital needs in the capital area as well.
Health care systems want to increase access to care, Ochsner’s Tre Nelson said, but every new facility he’s worked at in the past three years has been affected by inflation and interest rates.
“It costs a lot more to build a new facility now than before,” he said.
At the same time, wages have been rising in Baton Rouge — and that’s good or bad, depending on whether one is an employee or an employer, the panelists said.
Despite the increase in wages, in a market where the unemployment rate is 2.6%, Baton Rouge employers have three job openings for every single unemployed resident looking for work, Knapp said.
Baton Rouge College Chancellor Willie E. Smith Sr. said two-year colleges need to churn out new workers, especially as demand for workers in the industry continues to grow. All educational institutions must be more flexible in the future due to the demand for new employment, he said.
“If we had done some of these things 10 to 15 years ago, we probably wouldn’t have seen some of these differences in the workforce,” Nelson added.
Whether they have high school or college, the panelists see work for the future, and that’s good news for the region.