BusinessReport.com

The global economic crisis has slowly seeped into the lives of Baton Rouge business owners—especially those faced with an increase in operating costs and a decrease in profits.

But here’s some comforting news: According to The Brookings Institution’s MetroMonitor report, the Capital Region has one of the best economies in the nation. If there’s one thing that the ups and downs of the market in 2008 and the first half of 2009 have served to teach, it is that confidence is key.

The MetroMonitor study, which measures economic recession and recovery through six key indicators [employment, unemployment rate, wages, gross metropolitan product, housing prices and real estate-owned properties], evaluates just the nation’s 100 largest metro areas. The stable, relatively positive numbers that Baton Rouge generated landed the city at No. 8, even with a merely moderate increase in the percent change of GMP from the peak to the first quarter of 2009.

Baton Rouge Area Chamber President/CEO Adam Knapp says the ranking rings true. “If you look at our economic performance over the past year, there is no indication that we should not [be ranked high],” he says. “We have continually been ranked very high in most, if not all, economic indicators, whether it be employment, housing, etc.”

Still, recent numbers reported by Business Report indicate that not everything is rosy.

State unemployment claims are up from roughly 22,000 in late May 2008 to more than 56,000 in the comparable week of 2009. And East Baton Rouge Parish sales tax collections are down 1% in April from one year ago. These statistics lead to speculation that Baton Rouge could be starting to feel the effects of the recession.

“We tend to be a little bit behind the recession curve,” Economist Jim Richardson says. “Compared to other cities, we are well prepared to withstand the recession for the duration of it.”

There are other worries, however. State budget cuts to higher education, state employment, a slowdown of the chemical and petroleum industries and a slowdown in commercial construction—all the key indicators Brookings says keep Baton Rouge safe—could impact the region.

Richardson and Knapp say the impact won’t be as big as it might seem. “There’s no doubt that state government and education tend to be a major part of the Baton Rouge economy,” Richardson says. “And there will be cuts at LSU and in the state government. But if you look at the overall picture, for the city as a whole, you’re not going to be swallowed up by it. If you lose your job, it’s brutal. But from the city’s perspective, a lot of people won’t even notice it.”

As far as petrochemical and construction slowdowns, Knapp says the indicators aren’t yet pointing toward a recession. “Capital investment related to the chemical and petrochemical industry in our region is quite strong,” he says. “This is not to say that we should not continue to aggressively attempt to diversity our economy.” But, he adds, the city is still very strong.

Ultimately, the study’s results might serve as a cheerleader for business and industry to continue operating as usual. “These should give the businesses, no matter the size, the confidence to continue to invest in the Baton Rouge area,” Knapp says. “In terms of our business-development efforts, it is a substantial advantage to have third-party support of the health of our economy. It puts us in a very favorable light.”

Click here to download a PDF of Baton Rouge's report card.