Presentation on theme: "2009 Business Outlook Summit The Louisiana (and Northeast Louisiana) Economy Prepared and presented by: John Francis, PHD Assistant Professor of Economics."— Presentation transcript:
2009 Business Outlook Summit The Louisiana (and Northeast Louisiana) Economy Prepared and presented by: John Francis, PHD Assistant Professor of Economics (Louisiana Tech University) Robert Eisenstadt, PhD Associate Professor of Economics (University of LA – Monroe)
The following presentation will be available for review on-line at: cba.ulm.edu/cber
GSP 2004$139,327Rank = 25 GSP 2007$151,039Rank = 25 % change in GSP 2003-05 7.1%Rank = 21 % change in GSP 2005-07 7.0%Rank = 11 Louisiana Gross State Product ($millions): The illusion of our insularity.
The importance of oil in Louisiana’s growth. GDP Growth and Oil Prices (index)
United States 200620072008 Employment146,081,000146,294,000143,350,000 Unemployment6,491,0007,541,00010,999,000 Unemployment Rate4.3%4.9%7.1% Labor Force152,572,000153,836,000154,349,000 Louisiana 200620072008 Employment1,922,9431,937,0931,970,615 Unemployment71,65779,895116,172 Unemployment Rate3.6%4.0%5.6% Labor Force1,994,6002,016,9882,086,787 Employment by the Numbers
Louisiana employment growth has been relatively strong. Employment data from LA Dept. Of Labor; and U.S. Bureau of Economic Analysis.
Employment growth is mostly positive across the State (qtr 2 comparison). LA Dept. of Labor, Laworks.net
The relative performance of Northeast Louisiana. OLM = Ouachita, Lincoln, Morehouse Parishes
Home building in Louisiana mostly mirrors the Nation.
Permit data from U.S. Census Bureau; and McGraw Hill MarketTrack New Residential Construction – Permit Value
Construction employment in LA, however, remains stable. Nearly 20% annual increase in Civil Engineering projects. Public projects expected in NE LA include: Delta Community College New Airport Terminal
Louisiana lags the Nation in bankruptcies. U.S. Courts: U.S. Dept. of Justice
NE LA and the Nation are on the same general retail track
Seasonal sales were stronger locally Nov-Dec (seasonal) retail sales: Nation = -5.6%; LA = -1.4%; Ouachita = +1.2%
Motor vehicle sales are weak: US = -15.8%, LA sales = -15.6% -12.8% -17.0% Data from Cross-Sell reports -15.6%
Estimated value of auto purchases by Ouachita Parish residents.
From our perspective, there are two sources of concern when considering the long-term growth of Louisiana (and NE Louisiana). Out-migration of population Year-to-year uncertainty (volatility) of State tax revenues Relative economic strength is by no means a certainty in Louisiana
Net migration as a % of the 2000 population (2000-2008) Louisiana-6.76% We have shipped more people out of Louisiana than we've attracted Top 3 parishes for population growth Bottom 3 parishes for population growth.Livingston Parish23.55%.St. Bernard Parish-64.19%.Ascension Parish23.27%.Orleans Parish-47.70%.St. Tammany Parish14.83%.Cameron Parish-28.43%
Percentage change in Louisiana Monthly Tax Revenues: January/February 2008 to 2009 Current indicated effect on State revenue of Louisiana tax policy change.
($000's) combined 2008 combined 2009%change Individual withholding$356,657.8$282,378.0-20.8% Individual total$539,714.2$533,388.1-1.2% Public Utilities$667.2$1,074.061.0% General Sales tax (excl MV)$495,246.9$460,115.3-7.1% Severance Taxes$176,329.4$119,875.2-32.0% Total State Revenue$1,410,362.2$1,299,058.4-7.9% Year over Year Tax Revenues (to date) by the Numbers
Tax burden (ranking) of Louisiana and surrounding states.
Return marginal tax brackets to pre-Stelly levels:-$300,000,000 Reinstate the deductibility of excess Federal Itemized:-$250,000,000 Subtotal-$550,000,000 Oil prices budgeted at $84/bbl. Current actual price = $50/bbl Shortfall in severance taxes -$410,000,000 Total estimated shortfall-$960,000,000 LA policy changes and the (approximate) annual effect on State tax revenue. Add to this amount the effect of a declining tax base (recession) and you have the proverbial “billion here, billion there…”
Next up: Determinants of State Tax Revenue Variability. Labor Out-migration by Education and Skill Level.