Tracking the

Economic Impact of COVID-19

One of our commitments to the New Orleans community has been to provide unbiased, objective economic development information. We do this to help inform public policy and to ensure that businesses, job candidates, and stakeholders are equipped with the best information to ensure that New Orleans becomes the most attractive city of its size for financial and human capital investment. COVID-19 has only underscored the fierce urgency of this enduring commitment.

To shed light on the current economic crisis and forecast ways to combat its effects, The New Orleans Business Alliance is piloting a new dashboard, to be updated monthly, focused on data which identifies tension points related to revenue and industry growth in New Orleans' top six industries – accommodation and food services; mining, quarrying, and oil and gas extraction; retail trade; professional, scientific, and technical services; real estate, rental. and leasing; and wholesale trade. 

The impact outlined in the dashboard is derived from the recent Deloitte report which points to an 8.3% dip in GDP for 2020, as well as the Opportunity Insights' Economic Tracker which highlights a drastic reduction in consumer spending. Navigating out of the recession is a key focus, and this analysis may be used to acquire potential strategic gains as the global economy shifts and reorders itself in light of COVID-19.

Forecasted Lost Revenue

It remains to be seen how the pandemic with ultimately impact New Orleans’ projected revenue.  Initially, we forecasted loss of revenue based on the Deloitte report’s projected 8.3% reduction in GDP. We now know that number is conservative as data from the Bureau of Economic Analysis (BEA) mentioned a 32.9% decrease in GDP at the end of the second quarter.  On the national scale, there has been significant movement.  According to the BEA, “real GDP increased at an annual rate of 33.1% in the third quarter, as efforts continued to reopen businesses and resume activities that were postponed or restricted due to COVID-19.”

*Note: We chose not to update this chart on a month-to-month basis as these releasings are extremely conservative.

Employment Changes

When we look at the data available, it seems as if the labor force is improving.  New Orleans started 2020 with 180K people in the labor force and as of November 2020, it had a 185K people in the labor force.  While the total labor force has grown, so too has the number of unemployed.  In the beginning of the year, there were 10K people unemployed and as of November, there were approximately 25K.  For comparison, during the same time period in 2019, there were 9k people unemployed with an overall unemployment rate of 5%. 

Particular attention should be given to the increased unemployment rate.   Prior to the pandemic, New Orleans’ unemployment rate was almost equal to the State’s and only slightly higher than the national unemployment rate.  However, since the pandemic, New Orleans’ unemployment rate has seen an increase of about 60% when compared to the nation and state, which is yet another testament to how New Orleans has been negatively impacted.

Along the lines of unemployment, disaggregated data is even more telling, particularly for those in lower paying jobs. According to the data, when compared to January 2020, as of October 22, employment in New Orleans was down 26% amongst low-income employees (<$27K), 12% amongst middle income employees ($27K-$60K), and 5% amongst high income employees (>$60K).

Unemployment Changes

Nationally, the unemployment rate peaked at 14.7% last April and has continued to decrease since then.  At the state and local levels, there was a similar trend with a 2020-year-high of 22.2% in New Orleans and 14.5% at the State-level.  Previously, the reduction in the national unemployment numbers have been attributed to people dropping out of the labor force (Axios Report). Unlike the Nation, the local downward trend was interrupted by an increase in October.  One point to make is that although the unemployment rate at the state and city level decreased again in November, it is still higher than it had been since early in the third quarter of 2020.    

Initially, the UI claims metric was used as an early indicator of the numbers of people that were filing for unemployment and as a measure of the overall economic health. Those numbers skyrocketed last Spring at the onset of the pandemic and slowly trended downward throughout the year. Between April and July, New Orleans averaged 45K total UI claims. At the end of July there were significant decreases when the extra unemployment benefits under the CARES Act expired and with a second wave of reductions that coincided when most would have exhausted the 26 weeks of regular benefits under state-funded programs.  From July through the end of 2020, there has been a week-to-week average reduction of approximately 1700 claims.

Most recently at the national level, the last few weeks of the year also saw week over week reductions in initial claims.  Other than a late-year-surge, which LWC attributes to and influx of fraudulent claims, in New Orleans, initial UI claims were also on a steady downward trend since the pandemic began.  However, during the month of December, New Orleans had 4-consecutive weeks of increasing initial UI claims, followed by more than a 200% increase in early January.  The more than 2600 initial UI claims during the week of January 2nd,2021 were the most since mid-July of last year.

The Creative Economy

Comprised of industries like film, fashion, and advertising, and occupations such as artists, musicians, photographers, and performers, the creative economy has suffered greatly. From April to July, 2020, within the New Orleans Metro area, more than 12K jobs were lost across the creative industry and more than 10K were lost amongst creative occupations. Additionally, estimated monthly sales within the industry were $469M and $283M in cumulative monthly earning. 

*Note: These figures are based off a predicted 24% contraction in the national GDP taking hold in April and progressing through the second quarter of 2020, with unemployment averaging 14% over the same period.  Considering the uniqueness of New Orleans’ economy, impact on the creative economy could be significantly greater.

Consumer Spending

Consumer confidence and consumer spending are key drivers for the economy, with 70% of the GDP being attributed to consumer spending in 2019. Given our economic reliance on hospitality and tourism, consumer spending holds particular importance in our local economy.

According to data collected by Morning Consult’s Index of Consumer Sentiment, nationally, as of January 12th, consumer confidence fell slightly as a result of the violent attack on the U.S. Capitol.  Additionally, because of last week’s events, the impact of the second coronavirus relief bill will not be felt until late January.  At the State-level, consumer confidence numbers continued to decrease from November to December.

Locally, during the week of January 3rd, 2021, overall consumer spending is slightly better than the 2020 baseline. However, within Arts, Entertainment, and Recreation spending by all consumers decreased by 46.7% compared to January 2020 and Restaurant and Hotel spending also decreased by 39%.  We know these are major contributors to the New Orleans economy.

We recognize that small businesses are the backbone of the economy. Nationally, minority-owned small businesses with employees accounted for more than 8.7 million jobs and generated more than $1 trillion in economic output. In addition to historic systemic issues that negatively affect minority-owned small businesses, the global COVID-19 pandemic “could disproportionately affect minority-owned small businesses for two critical reasons: they tend to face underlying issues that make it harder to run and scale successfully, and they are more likely to be concentrated in the industries most immediately affected.” According to a recent McKinsey survey, 58% of minority-owned small businesses are concerned about the financial health of their business, more than half have conducted layoffs, furloughs or completely shut downs. Additionally, a high concentration of minority-owned small businesses are in industries that are most vulnerable to the pandemic, including accommodation and food services and retail.

Small Businesses Open

The reduction of consumer spending caused by the pandemic has severely impacted the local small business ecosystem. When we compare data from January 2020 to December 30th, the number of small businesses open have decreased by 39% compared to the national rate of 30%. From an industry standpoint, the leisure and hospitality industry have decreased by 66% compared to 48% nationally. According to Opportunity Insights, business in the Uptown, Gentilly, Treme, and MidCity neighborhoods have suffered greater than other areas. 

*Note: This data is based on businesses that had a final transaction (credit, debit) where a purchase of goods was made.

Small Business Revenue

Just as we've seen small businesses close, we've also witnessed significant small business revenue loss. In New Orleans, revenue for small businesses has decreased by 65%. Similar to small business closings, leisure and hospitality has taken the hardest hit with a decrease of 84%.

Unique Job Postings

Comparing jobs postings analytics with the in-demand jobs identifies potential industry demand.  We recognize there isn’t a one-to-one relationship between jobs that are advertised and the numbers of people that are eventually hired as both job posting and eventual hires vary by industry and occupation.  However, advertised jobs are a good proxy for employer demand.  Overall, there is some evidence of positive movement with jobs postings. Early in the pandemic there was about a 50% reduction in the number of jobs posting between this year and last year.  Since then, the gap has closed some.  We’re still not at pre-pandemic levels but over the past 30 days, New Orleans has had a 23% reduction of jobs postings, which is a major difference to the earlier months of the pandemic. 

Within the six focus industries, job postings decreased drastically between January 2020 vs. 2021. Leisure and hospitality job postings are down 54%, professional, Scientific, and Technical Services job postings are down 290%, and manufacturing job postings are down 20%.  The education and health industry is the only area with any pre-pandemic growth.

Over the last 5 months, there has been little to no fluctuation in either soft skills or hard skills that are being recruited. When we disaggregate jobs postings, over the same time frame, jobs postings that require little to no preparation are down 48%, those that require average preparation are down 30%, and those that require high to extensive preparation are down 25%. From an industry perspective, leisure and hospitality has taken the biggest hit with a 54% reduction in jobs postings. The soft skills that are in-demand are general and can be applied across a spectrum of occupations and industries. Top recruited hard skills primarily align with Healthcare, Professional and Scientific Services, Hospitality, and Retail Trade Services. 

A few considerations while reviewing the dashboard: 

  • The purpose of this tool is not data analysis, but data accessibility for forecasting the impact of COVID-19 with interactive features.
  • This dashboard is a work in progress focused on providing time-sensitive data in an interactive format, NOLABA intends to update data and validate it as we learn more about the economic impact of COVID-19. 
  • Publicly accessible data has a lag time, meaning that the effects of COVID-19 may not show in much of the economic data sets traditionally tracked; it may take several months to fully understand the scale of the impact. As a result, we used job postings data to show near-real-time impact on the labor market of the City of New Orleans. 
  • The data shown is the most recent data provided and pulled from publicly accessible sources. Given the lag time of publicly accessible data, the data provided in this tool may have a lag in timeframe and vary by measurement.

Lastly, we want to acknowledge the efforts of our AVP, Data Analytics and Performance Management, Omar Stanton, in leading this effort. While not scholarly reviewed, we appreciate the input of Joe M. Ricks, Jr., PhD (Xavier University of Louisiana) and Robert Habans, PhD (The Data Center) in helping to refine this first edition.

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New Orleans, LA 70113 | 504.934.4500