Posted on 01/11/2006 11:26:18 AM PST by blam
Mobile economy big winner after Katrina
Wednesday, January 11, 2006
By ANDREA JAMES
Business Reporter
When talking about the fallout from Hurricane Katrina, economists often lump Alabama with Mississippi and Louisiana, but a new federal report indicates that the states' economic conditions are drastically different.
In the third quarter of 2005, Mississippi had the highest unemployment rate in the country at 7.9 percent, followed by Louisiana at 7.6 percent. Alabama's figure was among the nation's lowest -- just under 4 percent.
In quarterly job growth, Alabama ranked 29th nationally, while Mississippi and Louisiana experienced net losses and finished among the bottom three nationally. That's because the catastrophic Aug. 29 storm wiped out 290,000 jobs in Louisiana and Mississippi, setting the states back after years of gains, according to a Federal Deposit Insurance Corporation analysis of regional economic data released Tuesday.
"Alabama's experience in the wake of Katrina is going to be quite different than Mississippi and Louisiana," said Jack Phelps, an FDIC regional manager in Atlanta. "In terms of industry performance, you are going to see winners and losers."
The economy in Alabama, and particularly Mobile, was one of the "big winners," University of South Alabama economist Semoon Chang said in a separate presentation given in Mobile Tuesday morning.
However, south Alabama has some big losers too, Chang noted in a presentation to Mobile United. Most notable were problems in the seafood and attractions industries, Chang said.
For example, Katrina will cost Alabama's seafood industry almost $90 million in lost sales, wages and property damage, according to data compiled by Chang.
Winners like the city of Mobile, which can expect increased tax revenues, should help the losers out, Chang said. He suggested direct aid for Bayou La Batre, hardest hit among seafood towns, and a city effort to buy tickets from tourist attractions that suffered declines in attendance.
Although Alabama weathered Katrina in much better fashion than its neighbors to the west, local business leaders have struggled with a national perception that Mobile sustained heavy damage. Almost immediately after the storm, conventions were canceled and Delta Air Lines cut half of its flights from Mobile Regional Airport. A Delta official later said the company thought Mobile had been destroyed.
"People have an image of a place from the last thing that they remember or what they saw," said Bill Sisson, who leads the Mobile Area Chamber of Commerce's economic development effort. "What a lot of people remember after Katrina was downtown flooded on CNN."
To combat the image, local and state tourism bureaus last fall launched a $400,000 nationwide media advertising blitz, with the help of a federal grant, to tell the country that "Mobile is open for business."
Traditionally, economies get a boost from the rebuilding effort that follows a major disaster, and that is true for Alabama, according to the FDIC's Phelps. But the destruction in states to the west was so widespread after Katrina that such economic benefits haven't yet been realized, he said.
Katrina's aftermath was easily the biggest economic story in the region during 2005, and the storm's effects factor in a number of current trends.
Alabama job growth is fueled by construction -- much of it associated with rebuilding after Katrina and 2004's Hurricane Ivan -- as well as the growing auto industry, according to FDIC's report.
High energy costs, also linked to the Gulf Coast storms, are putting a crimp in some of Alabama's key industries, including pulp and paper, manufacturing and agriculture, according to the report. That threatens to dampen economic momentum that has been building in Alabama since mid-2002, the report said.
The energy crunch is pinching consumers as well. At $2,094, annual energy bills for Alabama households increased 23 percent between 2004 and 2005. With so much extra money going toward energy, less is left for buying homes, Phelps said.
When discussing the housing market, the FDIC's report particularly focused on Baldwin County, where it found monthly sales of existing homes "generally lower" in 2005 than during the same months in the prior year.
"This is the first slow down that we've seen, probably, in the past five years in the housing market," Phelps said. "That certainly will play into the general economy."
The cost of a home in Alabama is about 3.6 times household income -- a record high since the data was first collected 30 years ago, Phelps said. The nationwide average price of homes is five times household income.
Go Jags!
I've always wanted to visit that part of the country.
Go to Gulf Islands Natl Seashore. See the USS Alabama. Do a little casino action over in Mississippi.
To me, it looks like a nice part of the country.
Fort Morgan is awesome!
Just curious, did the hurrican wash away theat really bad smell over the harbor. It is some kind of industry smell, I was told. I can always tell when I am arriving in Mobile by the smell. I go through there on my way to see my parents 4 times a year.
I think that was the smell from the paper mills. They are all closed now.
I'm sure you guys don't miss that smell. Thanks for the update. Heading down that way in Feb to visit my parents again.
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