Hurricane Katrina and the Mississippi Economy
Following Katrina’s devastation, Mississippi’s economy faced a huge setback. As you can imagine, it’s hard to do business in a state whose entire infrastructure—roads, buildings, and electricity—has been destroyed. As time passed following Katrina, however, the influx of aid led to a boost in some sectors and in personal spending. But, after the economic collapse of 2009 and the BP drilling disaster of 2010, Mississippi is still facing many challenges.
One Year After
A year after Katrina, the Mississippi infrastructure was still in shambles, although the economic sector was showing some heartening improvements. Nearly 15,000 residences were destroyed in the Mississippi Gulf Coast area after Katrina, but one year later only 2,000 building permits had been issued for constructing new houses. Reconstruction was still frustratingly slow at the end of 2006, although in 2007 the effort would pick up more momentum.
On the positive side, retail spending was up by 19 percent following Katrina, due to the influx of aid money and the need to replace basic household items. The casino industry also made a stunning recovery; by October of 2006, their revenues and employment levels were back to pre-Katrina levels. Although most areas of employment were down—notably, service sector employment— construction jobs were predictably on the rise and experienced a large boost in employment.
Three Years Later
The fall of 2008 brought the national economic collapse, setting Mississippi’s economy back significantly, as well as the rest of the United States. Unemployment continued to rise as 2008 went on, edging over 7 percent—what would be the beginning of a downward spiral. Manufacturing, furniture, and motor vehicle and transportation sectors experienced some of the sharpest drops in employment. The housing market continued to slump, as the number of housing permit applications dropped sharply and Mississippi led the nation in overdue mortgage payments.
On the bright side, the positive trends that appeared in the first year following Katrina continued. Personal spending was high, and construction employment continued to grow as major projects and general reconstruction continued. Fortunately, the state still had $4 billion in federal aid to help strengthen its budget, as well as income from the forthcoming federal stimulus package.
Five Years Later
In 2010, the Great Recession was in full swing, and the BP Deepwater Horizon disaster further smothered Mississippi’s dwindling economy. Unemployment was over 10percent, although the rate of job loss was said to be slowing. Construction, manufacturing, business and professional activities, mining and logging, and information sectors experienced job losses in the range of 5-10 percent in the first half of 2010. The oil spill put a further damper on Mississippi’s struggling fishing and tourism industries. The one positive note was perhaps, ironically, the housing industry; Mississippi’s foreclosure rate hovered below the national average of 4.6 percent.
Sources:
Mississippi Economic Review and Outlook. (2008) Mississippi Institutions of Higher Learning.
Mississippi Economic Review and Outlook. (2006) Mississippi Institutions of Higher Learning.
Mississippi Economic Review and Outlook. (2010) Mississippi Institutions of Higher Learning.