While much of the U.S. Economy took a nosedive after the housing bubble helped to create the Great Recession, a few states were able to avoid much of the local economic turmoil which followed. Most states suffered large increases in unemployment, a wave of home foreclosures, and lacked cheap capital to invest in new startups. Louisiana—home of Mardi Gras, New Orleans, crawfish, corrupt politics, and the beautiful bayou landscape—managed to avoid much of the chaos. While the state was still hit by the recession, the experience was mild compared to that of the neighboring Gulf States. But why? Here are a few key points that helped keep Louisiana afloat during the hard times experienced by much of the rest of the country.
Billions of dollars from the federal government in the aftermath of Hurricane Katrina helped cushion the financial losses that might have otherwise been felt during a nationwide recession. And with a declining population each year, there is less competition for jobs in the state. According to a report, “Louisiana’s net non-farm, seasonally adjusted employment increase between January 2008 and June—which marked the fourth anniversary of the official end of the recession—was approximately 14,300 jobs. That’s a roughly 0.7% increase.” In 2010, the unemployment rate dropped a full one-and-a-half percent while it was rising elsewhere.
Local Tourism also increased in the state, and Louisiana knows how to deliver a good time at a very inexpensive rate. As a result, less happy neighbors experiencing a heavier backlash from the recession came to Louisiana in seek of jazz concerts and Mardi Gras, week-long music and food festivals, and cheap places to stay. A decline in air traffic occurred, suggesting more people took day-trips to Baton Rouge and New Orleans, or drove from out of state to visit for a weekend. Due to the increase use of this ‘cheaper method than flying’, increased visitors had more to spend on the Louisiana economy.
Louisiana heavily relies on the oil & gas production industry, which drills off the coast of the Gulf of Mexico and operates several natural gas wells throughout the state. Refineries reside throughout the southern part of the state, and thousands of jobs depend on this market. Drilling and exploring for these resources did not stop during the recession. As a result, so many working people in the oil and gas production industry (and periphery industries like refinery, transportation, operations, engineering, etc.) simply did not feel the brunt of the recession.
The Port of New Orleans also continues to facilitate mass domestic and international trade. American companies use the port to ship product up the Mississippi river, and foreign capital comes directly to the port controlled by the City of New Orleans. This creates continued job opportunities for port workers, and was a small but necessary, component for literally the world to pull out of the global economic crisis.
While the state of Louisiana still struggles to deal with its looming credit crisis and its public education sector, it is able to place immense focus on resolving these issues. All the while, much of the rest of the country had to mothball similar issues in order to deal with the side effects of the Great Recession. People from all over the world continue to come to New Orleans, the cultural capital of the American south, and with the state’s declining population, there are fewer people with more money. Louisiana is likely to be one of the first states to pull completely out of economic hardship before the rest of the country, and tourists can already hear the jazz music playing all the way to the bank.
Maxime Rieman is a writer for NerdWallet, a financial literacy site where consumers can find help for issues ranging from pet insurance cost to lowering mortgage rates