New Orleans asks: 'What recession?'

After Katrina, the Big Easy is slowly attracting newcomers and rebuilding its economy.

Chicago is "a wash," says Jason Weyland, an architect who lost his Windy City job when his firm cut half its workforce earlier this year.

So on this day Mr. Weyland – married, bespectacled, and crisp-suited – is on a job hunt in a city that, just a few years ago, many Americans had written off, irrevocably sold down the mighty Mississippi.

"It's hard to believe, but New Orleans has become a legitimate city," he says, riding the St. Charles Streetcar line to a promising follow-up interview. "It's got jobs, great culture, history, and it's a city where people walk, which I like."

As the anchor of Louisiana – the only state with positive employment numbers – New Orleans is back.

Drawn by its walkable streets, antique neighborhoods, and laissez-faire regulation, young American workers are flocking to the Big Easy to stay, sensing an opportunity to redraw the economy and at the same time be a part of something bigger: rebuilding the only major US city to be completely devastated by a hurricane.

In many ways, it's a stunning and irony-laden turnaround for a city whose deep social inequalities were laid bare when hurricane Katrina flooded it 3-1/2 years ago.

It's too early to tell, though, whether New Orleans can build an urban economic model to help lead the nation out of its economic doldrums – or will wind up spinning downward on the tail end of the recession.

"New Orleans tends to zag when other cities zig," says Michael Hecht, president of Greater New Orleans Inc., a regional economic development agency. "We're zagging pretty good right now."

"Think of it as the third act of our redemption story," he adds. The irony "is that while the rest of the country is mired in recession, we have a chance to leapfrog and lead the country out of this economic mess."

To be sure, New Orleans is far from perfect. It's still the country's murder capital, and social inequities and the failure of many poorer residents to return are evident in the weed-choked and snake-infested desert of the Lower Ninth Ward, where nearly 700 people died after Katrina roared ashore on Aug. 29, 2005.

At the same time, tens of billions in federal recovery aid, along with state ethics reform and business-friendly tax packages courtesy of Republican Gov. Bobby Jindal, have hastened the city's progress, some economists say. The city's relatively low population compared with that before Katrina has helped keep unemployment low, though the total workforce – 527,000 in the 10-parish greater metro area – still hasn't reached 1980 levels.

The $14.4 billion federal levee-improvement project, a new $3 billion refinery on the city's west side, the $500,000 renovation of the Jackson Barracks military base, and a $60 million downtown residential complex called 930 Poydras are all bucking the dreary national total for construction, which is down 13 percent from early 2007.

Add to that a key port and a largely recession-proof shipbuilding industry that services mainly the Navy and the energy industry, and it becomes clearer why the city has been able to skirt economic, if not natural, storms.

"Among the places in the US that you can go, [New Orleans] is going to be one where there may be greater opportunities for employment," says Baton Rouge economist Loren Scott, a veteran tracker of the New Orleans economy.

But entrepreneurs in New Orleans say the real reason the city has outperformed expectations is the human capital that has flowed into the city: a great migration similar to ones that cities like Portland, Ore., saw in the first half of this decade – young, highly educated, and socially conscious risk-takers looking for a "livable city" to make their marks on the world.

Some signs: Tulane and Loyola universities, despite recent hurricane shutdowns, are seeing record enrollments, and the anecdotal evidence is that many graduates, instead of leaving as they often did in the past, are sinking roots.

Two years ago, Fast Company magazine ranked New Orleans as one of the five slowest cities in the world, alongside Budapest. This year, the city had catapulted to become one of the world's five fastest cities, according to the magazine's editors.

Despite risks of the recession overcoming the state's gains (in March the metro area lost jobs – 1,100 – for the first time since Katrina), some economists expect Louisiana to have a net gain of 1,300 jobs by the end of the year, at a time when employment has been skidding in cities such as New York, Atlanta, Chicago, and San Francisco.

In late April, two major rating agencies upgraded New Orleans's municipal bonds to investment grade for the first time since hurricane Katrina hit, citing "the city's generally improving financial profile."

Tourism and convention business has shown continued growth, partly based on what locals call the "AIG effect": a rejection in corporate America of glitzy junkets in favor of "volun-tourism," where convention attendees can spend a day helping citizens rebuild the city. That sentiment has also spread to corporate investment in local businesses hoping to sell franchises, such as the all-organic Naked Pizza company.

And aside from Mardi Gras and Jazz Fest – both of which have boomed in the past two years – the city counted 14 neighborhood festivals on a recent April weekend, as this late-night city seems determined to roulez through the recession.

New Orleanian Scott Couvillon, who helps run a new "un-junk mail" marketing service called Dukky, says the city has become "an entrepreneurial petri dish" because of several factors: hands-off regulation, and "empathic" young people looking for opportunity and a "coarse existence" in a place famous for its paucity of social and city services.

In a warehouse in a run-down neighborhood on St. Philip Street, Robbie Vitrano has created a laboratory of his own: Dozens of websites are running here as part of his ad agency's "venture marketing" effort helping start-ups conquer market share.

Young cultural anthropologists and former corporate raiders work in an open, newsroom-style environment, overseen by a "Jolly Louis" flag – a version of the pirates' skull and crossbones, showing Louis Armstrong against a backdrop of crossed trumpets.

"New Orleans has become a destination for a generation asking: 'What's next?' " says Mr. Vitrano.

Katie Del Guercio left a corporate job in Los Angeles a year ago to find more meaningful work. She volunteered in New Orleans for three months and, after leaving for a trip to Europe and a stay with her family in New Jersey, she made up her mind: New Orleans would be her home.

"The city feels like a college campus for grown-ups trying to make things happen," says Ms. Del Guercio, a manager with a progressive job-matching service called Koda.

Many city observers aren't surprised. Errol Laborde, a local bon vivant and editor of New Orleans Magazine, likens the city's comeback to two other historic milestones: the period right after the Louisiana Purchase and the tail end of Reconstruction, when thousands of people emigrated from the East Coast to find their fortunes in Louisiana.

"We're seeing a similar combination of new money and a pioneer spirit in New Orleans today," says Mr. Laborde.

But there are still concerns about the city's current state of affairs and direction.

Housing advocates say that in the process of courting a new workforce – whether college grads from other cities or Hispanic laborers – the city has focused less on helping the displaced and largely African-American population plug into the new jobs dynamic.

And while new apartment complexes are going up with the help of federal and state tax credits, the hardest-hit areas – the Lower Ninth Ward, New Orleans East, and Holy Cross among them – are still struggling to rebuild.

But even on the racial disparity front, there's some good news: The city's focus on charter schools is paying off with test scores showing a narrowing racial gap.

"There's a disconnect between the reality of the economy in New Orleans and the wage structure of the jobs it provides," says New Orleans-based Kalima Rose, a senior associate at PolicyLink, a national advocate for housing equity. But she's also optimistic. "I'm thinking we're going to see over the next four or five years a continued return of neighborhoods and historically displaced people who want to come home but are still trying to organize how to get the resources to do it," she says.

As far as lessons learned, experts say, New Orleans does give a glimpse into how federal aid – whether recovery money or a major stimulus package – can spark localized growth.

On the other hand, Washington's current policy trajectory – higher taxes for the rich and added regulation for industry – seems to run counter to the Louisiana experiment, which is largely based on lower corporate taxes and less regulation, especially for entrepreneurial enterprises.

Still, New Orleans can offer at least one glimpse into how to recover from an economic shock: In a word, insouciance, says Richard Sutton, a banker-turned-royal-cheesemonger-turned-New Orleans entrepreneur.

"Historically, New Orleans people don't necessarily care what the rest of the world thinks or does," says Mr. Sutton, whose St. James Cheese Co. has grown rapidly since he relocated here from London after Katrina. "People here are really asking: 'What recession?' "