Currency
A series exploring the highs and lows of Lafayette’s economy, providing critical commentary about what’s working and what’s not.

ANALYSIS: Disasters are giving Lafayette’s economy a sugar high

Illustration by Peter DeHart

If you only read the headlines about Lafayette’s record-breaking retail sales you’d think our economy is booming. But disaster response and recovery spending has created a sugar high in Lafayette’s retail sales that is masking a still struggling economy.

The impact of Hurricane Laura last year provides a perfect case study. After it hit in August, Lafayette had the highest retail sales on record for the months of September, October and November. We also experienced the second best December ever, topped only by the all-time biggest in 2014 when Lafayette’s economy peaked. 

Lafayette Parish generated roughly $260 million more retail sales over that same four-month stretch in 2020 than in 2019, a year-over-year increase of 12.3%. 

Overall, 2020 outproduced 2019 by $85 million. Without that $260 million boost, however, much of which is attributable to disaster, retail sales could well have declined by $175 million in 2020 instead of growing. 

Of course, no one would have been surprised if retail sales fell short in 2020, given the pandemic shutting the economy down for a couple of months. But it’s still eye-opening when we look at just how much of an impact disaster spending can have on our economy. Hotel sales in the city of Lafayette skyrocketed after Hurricane Laura devastated the Lake Charles area in late August, scattering thousands into hotel rooms all around the state: 

Hotel retail sales (in millions USD)20192020
August$4.3$3.6
September$3.8$7.4
October$4.2$7.5
November$4.2$4.2
December$3.1$3.3
A comparison of hotel retail sales in the city of Lafayette

To give these numbers more context, the last time Lafayette’s hotel sales topped $7 million for months in a row was the stretch from August to October in 2016, a result of the year’s historic flooding. Lafayette’s hotels used to routinely exceed $7 million in monthly sales back in 2014, but that was before the bottom fell out of our local oil and gas economy. 

Given the shutdown on travel and tourism, it should surprise no one to learn that hotel sales were down overall in 2020, falling from $55 million to $46 million. But without the disaster spike, total sales would have been closer to $40 million, which is less than half the volume Lafayette experienced from 2014-2016, when annual totals topped $80 million.

While at first blush this may just seem like a problem for hoteliers, hotel revenues are a good indicator for a lot of the economy. Everyone renting hotel rooms is also spending money in local restaurants and bars and stores and gas stations. Last year was an outlier because of the pandemic, so it’s not easy to unpack just how much money our economy gained as a result of Laura. But having hundreds, if not thousands, of people temporarily moving to your area fleeing disaster clearly makes a difference.

It’s too early to calculate Ida’s impact, but anecdotally it appears to be following a similar pattern. Hotels were bursting at the seams for a couple of months as people migrated to Lafayette, between those fleeing devastation and those mobilized to help with recovery.

With the Gulf warming and storms increasing in intensity, it’s inevitable that more large hurricanes are going to continue hitting South Louisiana and impact Lafayette directly. 

Of course, the pandemic itself is a disaster supercharging Lafayette’s economy. Lockdowns in 2020 were a big blow for businesses, but the federal response has flooded Lafayette with free government money.

Between the three economic impact payments, most adults in Lafayette received $3,200 and most children received $2,500. That means a typical family of four got $11,400 between May 2020 and March 2021. In rough math, that represents more than a billion dollars injected into Lafayette’s retail market, which includes surrounding parishes. 

And that’s before we factor in enhanced unemployment benefits, Paycheck Protection Program loans, and all the other stimulus spending approved over the last 18 months. That’s literally billions of dollars being put into people’s pockets that they’ve had available to spend with Lafayette’s retailers.

What this all means to me is that Lafayette’s record-breaking retail sales aren’t a sign of a booming economy, but rather an economy that’s being artificially inflated by circumstances that aren’t sustainable. 

It’s been easy to lose sight of the fact that our city and our parish are still facing significant economic headwinds. Those problems that existed before the pandemic haven’t gone away. And we can’t afford to pretend they have.