With two Category Five hurricanes battering the Caribbean already this year, recent reports on the rebuilding of the Louisiana and Mississippi Gulf Coast economies have added significance. So far this hurricane season the US has not been badly affected, but it was a different story two years ago. The New Orleans metropolitan area of Louisiana was devastated by Hurricane Katrina and a recent report from the University of New Orleans shows that economic growth there is slowing.
The University highlighted a raft of reasons for the slowdown, including lack of affordable housing and medical care, limited public schools and damaged infrastructure. With little low cost housing available there is now a labour shortage in the area and low-skilled workers are being paid substantially more than before the hurricane. The report observes that many companies are now running with fewer employees but often achieving higher sales.
A case in point is the gambling industry where revenue is now 12% higher than the pre-hurricane level. However the level of employees is 87% of former numbers. The same is true in the hotel industry, with employee numbers at just 66% of pre-hurricane figures. Hotels, however, are still operating at only 78% of former levels. In 2004 New Orleans achieved a record of 10.1 million tourists; in 2006 visitor numbers were down to 3.7 million.
The slowness of resolving insurance claims is widely blamed for slowing rebuilding progress in both Louisiana and Mississippi. Biloxi has received a boost from the reopened casinos but many homeowners are still unable to return to their houses. In some neighbourhoods it is estimated that only 30% of homes have been repaired, and insurance problems are frequently the reason. There is now also the factor of high insurance rates to pay to insure homes.
Progress in Biloxi has been rapid in the two years since Hurricane Katrina. New Orleans has not fared quite as well, having lost around 30% of all jobs initially. Things are beginning to pick up but, as the University report points out, the local economy is unlikely to return to pre-storm levels without ‘aggressive economic development.’ (E-09.05.07)
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