How The Aftermath Of Hurricane Katrina Helped Louisiana Avoid The Great Recession

 

Flag_LouisianaWhile 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

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Recent Posts

6 Comments

  1. I love Louisiana and New Orleans specifically. I was there fairly shortly after Katrina and the tourists were already out in full force. I’m glad that things are on there way back to where they were.

  2. So it sounds like it is a good time to visit Louisiana. Too bad it had to be a major hurricane to get them to this point.

  3. Wow, interesting stuff here! I don’t know much about Louisiana, but it’s great to hear that in a time of despair, at least financially, things were doing well.

    • Jim says:

      From a the tourism perspective things look ok, people are still vacationing, but hopefully they are not doing so on Home Equity Lines of Credit 🙂

Leave a Comment

*

People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
protecting your identity, ways to protect your identity, identity theft

Easy Ways to Protect Your Identity

Last month, I got a letter from the U.S. government which said basically, “We’re sorry but there was a data breach. This means... more →