New Orleans: bright spot in recession

Los Angeles Times

NEW ORLEANS — This city is a rarity in 2009: a place full of hard hats and big building projects and subcontractors roaring around in pickup trucks. A city where home prices have dipped only slightly, and where the unemployment rate is 5.3 percent — compared with 8.1 percent nationwide.

New Orleans, it seems, has largely dodged the Category 5 recession pummeling the rest of the country, thanks to its unique post-Katrina economy. For locals accustomed to bad luck and trouble, the good news can feel a little strange.

“It’s totally bizarre because normally, we’re the worst in everything,” said Brennan Manale, a clerk at Bella Rouge, a Magazine Street shoe boutique.

Jennifer Mansfield, a worker at a busy French Quarter gift store, put it this way: “I can’t tell how bad it is in the rest of the country because it’s so normal here. Well, normal for New Orleans.”

That qualification — “normal for New Orleans” — is a crucial one. The old cankers of crime, low wages and corruption still fester here, and neighborhoods remain choked with more than 68,000 vacant homes — most of which have been moldering since the flood of August 2005.

But some aspects of New Orleans’ “new normal” have resulted in an enviable economic picture when compared with the broader global meltdown.

Many chronically unemployable locals moved away for good, keeping the unemployment rate low. Meanwhile, a steady trickle of pre-Katrina residents has been coming back to town with plans to fix up old homes, creating an ongoing demand for renovations.

Perhaps most importantly, the federal government has allocated $34.5 billion in rebuilding aid for the state, with $19 billion of that amount still to be spent, according to the Louisiana Recovery Authority. And that doesn’t include the $3.8 billion headed to Louisiana under the federal stimulus package hammered out in February.

The recovery dollars currently are paying for projects large and small — including an $800 million replacement of the damaged “twin span” bridges over Lake Pontchartrain and thousands of homes being fixed under the state-administered Road Home program. The Army Corps of Engineers continues to use contractors to strengthen the levee system. And in working-class neighborhoods such as the Ninth Ward, laborers are still pounding away on small-scale renovations.

“Katrina was a horrible nightmare, but the reality is that for the construction industry, it’s been a blessing,” said Theresa Leger, a vice president of Landis Construction Co.

While nationwide construction employment fell more than 10.2 percent in January, in New Orleans it jumped 5 percent.

Construction jobs have dipped a little since then, according to the state workforce commission, but economists say the building industry will likely buoy the New Orleans economy for years — especially given the $19 billion of federal reconstruction money that remains unspent.

The delay in spending that money can be attributed, at least in part, to bureaucratic infighting and ineptitude. Ironically, those same delays could end up helping the city now, said Ivan Miestovich, director of the Institute for Economic Development and Real Estate Research at the University of New Orleans.

“That $19 billion is going to keep a lot of people in the construction industry and related fields working, and maybe help us ride out the worst effects of a prolonged recession at the national and global level,” he said.

In the days and months after the flood, contractors from around the country poured into New Orleans to take part in the recovery. More recently, a second wave of workers has arrived: those who are fleeing the moribund construction business in their hometowns.

Alvin Johnson, the human resources manager for Ellis Construction Co., said that a year ago, it was difficult to find good superintendents for the company’s numerous New Orleans building projects.

“Now they’re everywhere,” he said. “There are people begging to come down here because it’s been so desperate in the parts of the country they were in.”

One of Ellis’ recent hires, superintendent Roger Charboneau, is currently overseeing a 51-unit apartment complex built in a common post-Katrina style — the first floor is jacked about 12 feet above a ground-level parking garage.

Charboneau, 50, had been an independent builder in central Florida until the housing bust dried up his prospects. He and his wife were initially wary to move: they imagined New Orleans in ruins.

When they arrived, they were pleased to discover that swaths of the city were back to normal — just in need of builders like him.