With the calamity of 2020 in our rearview mirror, Lafayette’s economy is battered but not broken. The elephant in the room is how much longer this damn pandemic will last and who will be left standing when it finally ends. But that’s not the only aspect of our local economy with an uncertain fate. So let’s take a look at some of the ways in which the future of Lafayette’s economy hangs in the balance and how 2021 could turn into a year of recovery or a continued fight for survival.
Will the local oil and gas economy ever stop shrinking?
Lafayette’s oil and gas industry has lost jobs for six straight years, falling from a high in the metropolitan area of 23,492 at the peak in 2014 to 11,383 this year for a total loss of more than 50%. The GDP generated by oil and gas in Lafayette’s metropolitan area also fell more than 50% from $4.1 billion in 2014 to $1.95 billion in 2016. Though it had been recovering slightly up to $2.24 billion in 2019 – the latest year we have data for — 2020 will undoubtedly point that arrow downward again. And it’s not clear that 2021 will be any better.
Not only is there tremendous global uncertainty tied to the pandemic that’s suppressing demand while supply piles up, but rig counts in South Louisiana both offshore and onshore have been dropping for more than a decade, leaving oil and gas production in our state a shadow of its former self. So the odds of Lafayette’s oil and gas industry ever recovering to its former glory is effectively zero.
The question now is what will our new normal look like?
This year should be critical in determining if our oil and gas industry has hit bottom and can start building anew or if it will continue to see its share of our local economy erode away.
Will development Downtown keep building momentum?
After decades of waiting for development in Downtown Lafayette, we’re finally seeing progress. Between the new apartments that came online in 2020 and those slated to open their doors this year, Downtown will have hundreds of residential units pop up virtually overnight.
The real test in 2021 will be whether there’s enough people who want to live in all that new housing. If demand is strong, the momentum should continue. But if demand is weak, it could scare away investors and developers, and Downtown’s burgeoning growth could shrivel up quickly.
Helping things along will be the first investments made by the Economic Development District tax passed last year to fund Downtown infrastructure projects. But holding things back is the pandemic, which has lowered demand for density in many cities, according to the Federal Reserve Bank of Dallas.
What big stories are you watching this year? Make your bold prediction here.
Which restaurants and bars and music venues and retailers will be able to stay open as the impact of the pandemic stretches into its second year? Which office buildings will still be economically viable with so many people working from home and so many local businesses hurting or shutting their doors? And how much will Lafayette’s ongoing economic challenges continue to hold back Downtown even after the pandemic starts to get under control?
While I’m bullish about Downtown’s prospects, I’m also concerned about what will happen if 2021 doesn’t continue building on the momentum that’s been building to develop Downtown.
When will tourism start to recover and who will be left when it does?
Tourism is Lafayette’s second biggest industry, according to Ben Berthelot, head of the Lafayette Commission and Visitors Commission, and it has been decimated by the coronavirus. It’s going to be months before things will go back to anything resembling normal, and it could be even longer before business travel and conferences recover all the ground that’s been lost.
We already know we’re going to miss another year of a normal Mardi Gras and Festival International. The earliest travel might return to normal is this summer, and that’s only if vaccines are widely available and administered. The best hope is that once the pandemic settles down big pent-up demand for travel will yield a quick boom in tourism. When that will happen is the essential question.
I fear that 2021 will be the breaking point for many hotels, venues, restaurants, retailers and cultural institutions that power our tourism industry, especially if people start losing hope that normal won’t be returning for many months still to come.
What will be the impact of local government disinvesting from arts and culture?
At the same time that Lafayette’s arts and culture market is facing an unprecedented drop in demand, it will also have to navigate 2021 with significantly less support from Lafayette Consolidated Government.
Take the Lafayette Science Museum, for example. Mayor-President Josh Guillory led the charge to cut hundreds of thousands from the city’s support of this cultural institution at the same time that its ability to generate its own revenue has effectively fallen to zero.
His vision is that local philanthropists will pick up the slack, but the task of raising hundreds of thousands has fallen to the Lafayette Science Museum Foundation, which has never raised even $100,000 in a year before. The museum is going to have to figure out how to make things work in a depressed economy with increased demand for philanthropic support locally to keep people housed and fed and keep nonprofits’ doors open. And this is happening at a time when many local groups were already experiencing a decline in philanthropic giving in Lafayette based on some preliminary research I’ve been doing.
This dynamic applies to every cultural nonprofit that has seen its funding cut by local government. If we’re lucky, in 2021 Guillory’s vision will prove viable and philanthropists will step up to save these various arts and cultural institutions. But it’s just as likely that Guillory’s vision is merely wishful thinking and the lack of public support combined with our local economic issues forces cultural assets to shut their doors.
At this point, we can’t assume that any of these programs or facilities will survive, given the many challenges they face unless our community steps up in a big way to support them.
Will local government start fixing its finances and prioritizing infrastructure?
Maybe this is the optimist in me, but I’m hopeful 2021 is the year our local government finally starts fixing its long-term financial and infrastructure shortfalls. Lafayette’s economy cannot afford to continue running on potholed roads, overflowing coulees and crumbling public buildings. That could mean needing to pass new taxes, or continuing to cut spending, or finding more public-private partnerships, or redefining the scope of what public services LCG can deliver reliably.
The point is that it’s long past time for a plan to actually address the many issues that have been festering for years. How do we get parish government on sounder financial footing? How do we enable parish government to fix parish roads and parish drainage and the parish’s public buildings like the courthouse and jail? How do we leverage the city’s financial capacity to fix its roads and make smart investments that spur economic development?
Any economic recovery we are able to realize in 2021 will ultimately be weighed down in the years to come if we’re not able to figure out how to solve our chronic underinvestment in infrastructure. Hopefully, this will be the year we finally come together with a common purpose to stop kicking this can down the road and start owning up to addressing these problems head on.
Will Lafayette be able to capitalize on the outmigration of tech talent and companies from the coasts?
Every couple of years Lafayette has realized wins in attracting tech companies, first with Waitr, then CGI and most recently SchoolMint. But these companies have only offset a fraction of the jobs and GDP that has been lost in our oil and gas industry. This could prove to be the year when we’re able to really move this needle, as more and more tech talent and companies are considering leaving the bigger cities to relocate to smaller markets with lower costs of living.
Lafayette seems well-positioned to benefit from this trend given our relatively high quality of life relative to our cost of living. But we can’t afford to be complacent. Every other city in America is fighting to recruit these white collar professionals to their neck of the woods.
So my hope is that in 2021, Lafayette figures out a unified message and a coordinated strategy to entice tech talent to move to the not-yet-fully-realized Silicon Bayou. Because we’re going to need a lot more growth in these industries to make up for what we’ve been losing in oil and gas. Even Lafayette’s primary growth industry — healthcare — likely won’t expand enough to offset what’s been lost in oil and gas. Over the last 10 years healthcare added 5,000 jobs, but in just the last six years oil and gas lost 12,000 jobs.
How bad will the local housing crisis get?
Through the combination of a federal moratorium on evictions and the hard work of local nonprofits like ARCH and Catholic Charities of Acadiana, we’ve managed to delay the worst-case scenarios of a massive wave of homelessnbess, but we’re not even close to being out of these woods yet. Housing instability remains at historic highs locally, and more and more people are losing their homes.
Lafayette’s economy literally has tens of thousands of fewer jobs now than it did just a few years ago, so unless a lot of people are moving away, we’re going to continue to experience relatively high unemployment rates for the foreseeable future. When the federal eviction moratorium eventually ends and federal unemployment subsidies run out, our local housing crisis is going to go from bad to worse. When it does, the impact could cascade throughout our economy.
Hopefully, the federal government figures out how to help people in sustainable ways, and local government and nonprofit organizations figure out how to scale up their efforts to provide more affordable housing and homeless shelters. Because if we don’t, the crisis that has been brewing behind closed doors will spill out into the streets, both literally and figuratively.