The Gulf Coast: Two Years After Katrina

July 7, 2007

Narrator: Welcome to Southeastern Economic Perspectives, an occasional podcast from the Federal Reserve Bank of Atlanta. The following comments provide insight into the Gulf Coast recovery as the two-year anniversary of Hurricane Katrina approaches. Michael Chriszt, director of international and regional analysis, who analyzes and reports on economic conditions in the Sixth District, will focus on employment and housing. Following his remarks, Dave Avery, an economic analyst who is a specialist in manufacturing, tourism, wages, and prices, will comment on tourism.

Michael Chriszt: Thanks, Jean. The second anniversary of one of the nation's worst national disasters is right around the corner. An important question to consider is, how are the affected areas faring two years after Katrina? Well, let me first say that measuring economic recovery in the New Orleans area is not as clear cut as it is for the Mississippi coast. The difference is attributable to the fact that wind and storm surges from the hurricane completely destroyed homes and businesses along Mississippi's coast, but in New Orleans, thousands of homes and businesses were flooded, damaging but not totally destroying them. Assessing the progress of economic recovery in southeast Louisiana and the Mississippi Gulf Coast requires a hard look at the numbers. Data do give us a solid basis from which to analyze the progress. But what kind of data are we talking about? Well, not just the basic employment or housing numbers, which we'll discuss in a moment, but also some innovative measures that are not so well known.

For example, one of the first questions to ask is, how many people have returned to the New Orleans area? No official census has been taken, but data from the U.S. Postal Service give us a hint. Using delivery statistics, the Brookings Institution in a recent report noted that, in April of 2007, active residential deliveries in Orleans Parish stood at 64 percent of pre-Katrina levels. This might not sound like much until we compare it to the level on the one-year anniversary of Katrina, which was just under 50 percent. This suggests that New Orleans is slowly repopulating. Employment data also suggest a slow recovery in New Orleans. Data from the Bureau of Labor Statistics show that employment in the New Orleans metro area stood at just over a half-million in June of 2007, down from its pre-Katrina level of 604,000. That's a decline of about 17 percent. However, the June reading is up over 77,000 from October of 2005, so people are returning and are being reemployed, but a return to the pre-Katrina levels is not going to happen in the short term.

One of the reasons for the slow recovery in the New Orleans area is the housing situation. As I mentioned, the flooding in New Orleans left thousands of structures standing but unlivable. How to rebuild what was not totally destroyed has been a public policy question that the city and state officials have struggled with for two years. Again, the data show slow progress in addressing the housing situation. Today, the Army Corps of Engineers has demolished just under 5,200 structures in the New Orleans metro area; 3,750 of them in Orleans Parish. Estimates from earlier in the year, from the city of New Orleans, show that around 120,000 properties were damaged by flooding in the city. Permits had been issued for about 100,000 to be gutted or repaired, leaving about 20,000 unaccounted for. Of those 20,000, the city estimated that around 15,000 would have to be demolished. So according to those figures, there are still thousands of structures that need to be razed in Orleans Parish alone.

The recovery along the Mississippi Gulf Coast has been faster. In the Gulfport-Biloxi metro area, total employment stands at 108,000, not too far below its pre-Katrina level of 116,000. Mississippi did not have the mass exodus of population like New Orleans, although damage was substantial. The Mississippi coast was able to begin rebuilding soon after the storm passed, although problems continue regarding insurance payouts for damaged or destroyed properties and also in securing insurance for new and existing structures.

Katrina affected different industries in different ways. One of the more interesting industries is tourism, important to both New Orleans and the Mississippi coast. I'll turn to my colleague, Dave Avery, to bring us up to speed with developments in this industry.

Dave Avery: The recovery of the Mississippi Gulf Coast casinos is reflected in their growing revenues, stimulated in part by the infusion of insurance money and federal funds into the area. Gaming revenues for June 2007 were at record levels in the Mississippi Gulf Coast market and for the entire state of Mississippi as a whole. Revenue was up 8.7 percent over pre-Katrina levels, according to Mississippi State Tax Commission reports. Patron numbers and employment levels for the Gulf Coast leisure and hospitality sector continue to grow but have not yet reached pre-Katrina levels. With the Hard Rock Casino opening in July and the recently completed addition to the Island View [casino], most operators expect the Mississippi Gulf Coast market to continue to expand. Recently, Harrah's Biloxi Grand Casino announced a commitment for a casino resort with an estimated initial investment of $700 million.

According to Louisiana's Department of Culture, Recreation and Tourism, Louisiana's tourism picture is expected to brighten this year, attracting an estimated 22.2 million visitors, four million more than the state hosted last year. New Orleans' State of the City report said that this year's Mardi Gras drew a crowd of about 800,000, topping last year's crowd of 700,000 but coming up shy of pre-Katrina numbers of one million.

Harrah's New Orleans, the largest casino in the city, is on pace for its best year ever, with gambling revenue up 13.6 percent for the first five months of 2007, compared with the same period in 2005. However, despite these promising results, projections from the University of New Orleans, the U.S. Department of Commerce, and the Travel Industry Association of America show that Louisiana's tourism industry won't reach its pre-Katrina heights until 2010. One indication is the airline flight numbers in and out of the city's airport, which are increasing but have a long way to go before reaching pre-Katrina levels. Prior to Katrina, Louis Armstrong International Airport had 162 flights daily, servicing 42 cities with 20,676 seats. As of May 2007, the airport had 109 flights to 32 cities with 13,106 seats.

Chriszt: Thanks, Dave. Of course there's a lot more to the story of recovery in Mississippi and Louisiana than we have time to discuss, but the bottom line is that two years on, Katrina's impact continues to be felt. The long-term prognosis for both the Mississippi coast and New Orleans is positive. However, it's clear that New Orleans will take longer to recover.

Narrator: Thanks, Mike and Dave. Again, we've been listening to Atlanta Fed regional research team members Michael Chriszt and Dave Avery provide insight into the New Orleans and Gulf Coast recovery efforts. This concludes our Southeastern Economic Perspectives podcast. Thanks for listening, and please return for more podcasts. If you have comments, please send us e-mail at