In last year’s annual report, I talked about Will Wade just being hired and I said the team needed “rebuilding,” — a “rebirth.” I referred to the basketball program as a “sleeping giant.” I drew parallels between the new coach’s words and our region’s economy.
While we have seen a dramatic turnaround in McNeese’s basketball program in one season — we’re now heading to the NCAA Tournament — the economy in SWLA will take a little longer to change. But even though we have not reached our full potential, there are signs that we are growing and remain on track for a brighter future. We are still a sleeping giant, but the economy will hit the snooze button a few times before fully rising.
Last year, many Louisiana economists were lamenting the revisions to the labor data that occur every year. This was especially true in Lake Charles, as we saw a dramatic downward revision in our numbers, indicating that job recovery was not as great as preliminary estimates were telling us. While we did have some downward revisions in 2023, they weren’t as large as they were in 2022.
The two graphs at the top left show total employment and construction employment. Even after revisions, the labor data shows that the area was gaining jobs throughout the year despite falling construction, indicating more economic resiliency spread throughout other sectors.
As shown in the graph of over-the-year changes, all industries outside construction saw employment growth. Leisure and hospitality was the fastest-growing industry, adding 800 jobs (6.2 percent). Casinos, hotels, restaurants, etc., are so important to our economy and culture, it is encouraging to see continued growth in this sector. Manufacturing also continued growth illustrating the resilient industrial base of SWLA. While there hasn’t been much change in Trade, Transportation and Utilities (which includes Retail), Professional and Business services showed no change over the year.
The graph on the top left of the next page shows total taxable sales and building materials sales, as well as the 12-month rolling average of the total. This average acts as a trend to cancel out the large spikes and drops that happen in many months due to seasonality (Christmas, summer) and other factors.
I always like to highlight the strength of our area’s gaming sector and mention its strong recovery from the pandemic and storms. We now have a full year of data for the recently opened Horseshoe Casino. The graphs of gaming revenues and admissions go back to August, 2020. Since that time and throughout the year, total admissions at establishments in the region have been steadily increasing, indicating more visitors to the area even with a new establishment. While revenues rebounded very quickly, the trends have flattened out somewhat over the past two years.
As the gaming industry made a quick recovery from the pandemic shutdown (and subsequent restrictions) and storms, the high level of revenues has been leveling off, but these are still at a relatively high level. The graph on the previous page shows revenues per admission have been falling throughout the year, but are at higher levels than before the pandemic. This is partly attributable to rising inflation and uncertain economic conditions that cause people to spend more on necessities and less on leisure activities.
The Calcasieu Ship Channel may have seen falling values of exports throughout 2023, but those figures can be misleading. The 2023 figures in the graph show the values of the exports as well as the weights. While prices and inflation rates are still elevated, they are far below what they were last year. Much of the drop in the value of exports is due to falling inflation and prices of energy.
Looking at total weights indicates a steady level of export activity, even rising through the end of the year. Total exports values throughout 2023 were $5.5 billion below the same figures for the previous year, resulting in a 22-percent decrease. However, the total weights were 9 percent higher over that same time period. While some decrease in the values are partly due to downward inflationary pressures experienced in 2023, the weights have increased over the year indicating steady export activity in the region.
While measures like employment and gaming revenues are showing slow and steady growth, taxable sales are flat, while export values were falling (partly due to inflationary drops). To get a total picture of the economy, the H.C. Drew Center for Business and Economic Analysis at McNeese (mcneesedrewecon.org) puts out a monthly SWLA
Coincident Economic Index combining those four variables into one figure that illustrates the overall current direction of the region’s economy.
The data are seasonally adjusted and deflated (controlled for inflation) then combined using statistical techniques to show one index of current economic activity.
The index is based to 2017, so the level of the index will show where are our economy was compared to that year. The important aspect of the index, however, is the changes that occur over time.
The above graph shows the coincident index and the 12-month rolling average since August, 2020 (to show progress since the storms). The index shows that economic activity in the area has surpassed pre-storm levels. Since the beginning of 2023, the SWLA economy has been flat. It has also been slightly below the rolling average, indicating a downward trend, but that is “too close to call.”
The fact that the index and trend are so close means there was no reversal in the economy’s overall direction throughout the year. The area is still sleeping, but certainly has not seen any large drops.
After seeing little movement in the labor market throughout 2023, where can we expect to be in the next couple of years in terms of employment?
While forecasts are always subject to change as new information becomes available, the latest figures we have show a wide range of possibilities.
The graph of forecasts shows five alternatives as to where the number of jobs will be in the next one to two years. All show growth, but to different degrees.
Loren Scott’s forecast shows larger growth in 2024 and 2025, while Moody’s also shows a very slight upward trajectory. Lightcast shows very modest growth over the next two years while ULL shows completely flat growth into the next year. LSU’s forecasts have the area gaining some jobs throughout 2024. These are only projections and will change over time.
A great piece of news was just released as I was writing this article; the area has finally turned a corner and gained population! After losing population for the past few years, we have finally seen positive domestic migration into Calcasieu, and the overall population has increased throughout the five-parish area.
Calcasieu and Cameron combined gained 1,345 residents from July 1, 2022, to July 1, 2023. The entire five-parish region gained approximately 1,000 to reach almost 300,000 people. This hopefully reverses a trend of our area losing citizens and spells a brighter future for the labor force and business activity.
Building on our strengths of industry and culture results in new industrial projects, new businesses, attracting people to the area, and retaining current residents, and that can lead to a rebirth in the SWLA economy. The economy has not turned around as quickly as the Bayou Bandits, but it will in time. Rebuilding an economy can take much longer than rebuilding a basketball team, but there are signs that we are ready.
By Dan Groft, Assistant Professor of Economics, McNeese State University; Director, H.C. Drew Center for Business and Economic Analysis; and Economist,
Southwest Louisiana Economic Development Alliance
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