2008 Business Outlook Summit
The State of Northeast Louisiana
Prepared and presented by:
John Francis, PhD
Louisiana Tech University
Robert Eisenstadt, PhD
University of Louisiana - Monroe
The following presentation will be available
for review on-line at:
cba.ulm.edu/cber
First the bad news:
NE Louisiana’s official POPULATION continues to decline.
Table 1: Annual Estimates of the Population: April 1, 2000 to July 1, 2007
Geographic Area
Louisiana
.Ouachita Parish
.Lincoln Parish
.Morehouse Parish
TOTAL NE Louisiana
Total RLMA 8
July 1, 2007
4,293,204
July 1, 2006
4,243,288
July 1, 2005
4,495,670
July 1, 2004
4,487,966
July 1, 2003
4,473,679
149,502
42,562
28,783
347,173
304,611
149,733
42,580
29,274
348,640
306,060
148,289
42,715
29,440
347,470
304,755
148,550
42,781
29,962
349,364
306,583
147,945
42,389
30,272
349,806
307,417
Source: Population Division, U.S. Census Bureau
Release Date: March 20, 2008
RLMA 8 Population is down 2% since 2000
% Change in Population since 2000
Ouachita Parish
1.51%
Lincoln Parish
0.12%
Morehouse Parish
-7.04%
NE Louisiana
-1.83%
RLMA 8
-2.09%
Louisiana
-3.93%
United States
6.88%
Births-deaths
6,486
1,459
393
10,375
8,916
156,595
--
Net internal
migration
(4,255)
(1,407)
(2,572)
(16,837)
(15,430)
(332,435)
--
But RETAIL SALES continue to show strength….
Estimated Non Automotive
Retail Sales in Ouachita Parish
2,400,000,000
$2,281,341,746
2,300,000,000
$2,281,341,746
$2,251,168,164
$2,199,581,097
2,200,000,000
2004
$2,099,911,337
2,100,000,000
2005
$2,048,844,746
$2,001,965,499
2006
2,000,000,000
2007
$1,911,473,395
1,900,000,000
1,800,000,000
2006-07 chg = 3.70%
2006-07 chg = .87%
Current $ estimates
Constant 2007 $ estimates
1,700,000,000
Estimated Non-automotive Retail Sales In Lincoln Parish
$800,000,000
$716,901,922
$716,901,922
$700,000,000
$640,992,944
$623,241,686
$600,000,000
$500,000,000
$579,010,624
$545,382,869
$586,630,915
$534,453,125
2004
$400,000,000
2005
2006
$300,000,000
2007
$200,000,000
$100,000,000
2006-07 chg = 15.0%
2006-07 chg = 11.8%
$0
current dollars
constant 2007 dollars
And 2 years out, post-Katrina gains in retail sales are durable.
3-month Avg Annual % Change in Non-auto Constant $ Retail Sales
16.00%
14.00%
12.00%
10.00%
8.00%
constant $
chg 2005-06
6.00%
4.00%
constant $
chg 2006-07
2.00%
em
be
r
D
ec
em
be
r
er
N
ov
ct
ob
O
te
m
be
r
t
A
ug
us
Ju
ly
Ju
ne
ay
M
A
pr
il
ry
ar
ch
M
Se
p
-4.00%
Fe
br
ua
nu
a
Ja
-2.00%
ry
0.00%
Constant 2005 $ per-capita non-auto retail sales
Ouachita
Lincoln
United States
2007
$14,672
$16,163
2006
$14,478
$14,853
2005
$13,365
$13,577
$8,516
NEW CAR REGISTRATIONS in NE LA are down slightly
Cars
Total 2006
Fleet 2006
638
19
354
9
2172
137
3164
165
4430
Parish
Lincoln
Morehouse
Ouachita
Total
NE LA less fleet
Total 2007 Fleet 2007
570
27
295
10
2202
153
3067
190
4217
But trucks…
Parish
Lincoln
Morehouse
Ouachita
Total
NE LA less fleet
sales
Light 2006
1204
655
4291
10046
9670
TRUCKS
Medium 2006 Fleet 2006
136
207
17
11
262
474
485
861
Light 2007
1208
668
4488
10201
Medium 2007
49
3
214
340
9766
Fleet 2007
106
11
530
775
And CONSTRUCTION STARTS/PERMITS, though down
slightly from 2006, still show relative strength.
2007
405
476
$63,868,000
Ouachita Parish
New Residential
Units
Construction Cost
2006
452
557
$74,674,500
Annual change in constant $ residential projects
Value of constant $ residential projects
($millions)
50.0%
$140.0
$126.2
$116.8
$120.0
40.0%
$92.5
$100.0
$80.0
$89.0
30.0%
$82.2
$69.5
$60.0
$33.6
$34.6
$19.4
$40.0
$20.0
$0.0
2005
2006
2007
%Chg 05-06
Ouachita, LA
33.0%
20.0%
%Chg 06-07
10.0%
0.0%
-10.0%
Total Ouachita and
Union
41.8%
Union, LA
-20.0%
Total Ouachita and Union
-7.4%
Ouachita, LA
-11.1%
The inventory of EXISTING HOMES in NE LA continues to rise.
Homes listed versus homes sold in NE LA: 2003-2007
3,500
3,000
2978
2,500
2,000
3079
2715
2482
1766
1,500
1,527
sold
1,537
1,735
1,754
1,743
1,000
500
0
2003
2004
2005
2006
2007
Existing homes sold by bracketed price
2003
2004
2005
2006
2007
$50k-$200k
1,305
1,315
1,440
1,468
1,395
$200k+
222
222
295
314
348
Ouachita Parish Foreclosures
2004 2005 2006 2007
593 486 601 655
listed
and current selling prices appear reasonably stable…
Mean Selling Price for Existing Homes: NE LA
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
$50k-$200k
$200k+
All Homes
2004
$115,642
$277,084
$138,900
2005
$118,621
$291,031
$147,954
2006
$119,806
$288,276
$149,082
2007
$121,133
$287,090
$154,363
Data Source: NE LA Bd. of Realtors
Until you adjust for price changes
% change in Constant $ selling price
2003-04
-2.91%
2004-05
1.59%
2005-06
-4.04%
2006-07
-3.17%
% change in constant $ selling prices by price
bracket
2.00%
1.59%
1.00%
0.00%
-0.79%
$50k-$200k
-1.00%
-4.00%
-5.00%
2004-05
-1.69%
-2.00%
-3.00%
2004-03
$200k+
2005-06
2006-07
-2.16%
-2.79%
-2.91%
-3.17%
-4.04%
Constant (2007) $ prices per square foot show less of a decline.
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
-0.50%
-1.00%
-1.50%
% change in constant $ price per square foot
2.00%
1.55%
1.44%
0.80%
0.28%
2004-05
-0.59%
$50-200k
-1.23%
-0.93%
2004-03
$200k+
-1.31%
-0.83%
-0.33%
2005-06
all homes
2006-07
-1.31%
Constant (2007) $ Prices per Square Foot of Existing Homes Sold
2003
2004
2005
2006
2007
$50k-$200k
$73.13
$72.23
$71.81
$72.01
$71.34
$200k +
$104.31
$102.95
$105.01
$104.13
$105.63
all homes
$77.67
$76.66
$76.41
$77.59
$78.21
There are no significant changes in the number of days
homes-sold stay on the market.
$50k-200k
$200k +
All Homes
Average # of Days On Market
2004
2005
2006
2007
110
112
108
105
150
144
140
154
116
117
114
113
Some increase in square
foot prices appear to be
from a decline in
average home sizes
sold.
2003
2004
2005
2006
2007
mean existing home size sold
50-200
200+ all homes
1,785
3,003
2,024
1,757
2,954
1,989
1,754
2,942
2,056
1,711
2,847
1,976
1,698
2,718
1,974
EMPLOYMENT in NE Louisiana (HH survey) is down slightly…
Employment
RLMA 8
Ouachita
Lincoln
Morehouse
Jul-04
129,011
69,348
-38,169
11,031
Jul-05
129,363
69,300
-38,534
10,911
Unemployment Rates (%)
Jul-04
Jul-05
RLMA 8
7.6%
7.5%
Ouachita
6.0%
6.4%
Lincoln
6.7%
6.6%
Morehouse
10.4%
9.8%
Louisiana
6.4%
6.2%
United States
5.7%
5.2%
Source: www.laworks.net, U.S. Department of Labor (2007 preliminary)
Civilian Labor Force
RLMA 8
Ouachita
Lincoln
Morehouse
Jul-04
139,612
73,811
38,169
11,031
Jul-05
139,774
74,017
38,534
10,911
Jul-06
130,297
69,798
17,923
10,681
Jul-07
125,980
68,672
17,653
10,181
Jul-06
4.5%
3.8%
4.6%
6.4%
4.0%
5.0%
Jul-07
5.9%
5.1%
5.2%
8.3%
4.4%
4.9%
Jul-06
136,409
72,542
17,923
10,681
Jul-07
133,853
72,380
17,653
10,181
which is consistent with the Quarter 2 Establishment
Survey jobs data… (note the red under MLU)
New
Orleans
(RLMA 1)
510,647
477,750
605,447
608,264
2007-2
2006-2
2005-2
2004-2
Baton
Rouge
(RLMA 2)
412,987
408,226
392,154
383,775
Houma
(RLMA 3)
99,880
93,150
88,857
87,845
Lafayette
(RLMA 4)
270,213
262,194
248,054
243,506
Lake
Charles
(RLMA 5)
116,101
112,994
113,409
110,151
Alexandria Shreveport Monroe
(RLMA 6) (RLMA 7) (RLMA 8)
107,835
236,609
111,395
107,051
235,175
112,003
104,126
230,368
111,739
101,217
225,729
113,614
State
1,865,667
1,808,543
1,894,154
1,874,101
Percentage Change in Jobs (est. survey) by region
10.00%
5.00%
0.00%
N.O.
B.R.
-5.00%
-21%
-10.00%
-15.00%
LA Dept. of Labor, Laworks.net
HMA
LFT
L.C.
AEX
SHV
MLU
State
2006-07 change f/MLU
in red
2006-2007 %chg
2005-2006 %chg
2004-2005 %chg
Finally, while current dollar payrolls are generally higher in
NE LA, they lag the State (3 year change in orange).
Current dollar change in annualized establishment payrolls
25.00%
19.71%
20.00%
15.00%
12.46%
13.73%
10.85%
2004-05 qtr2
10.00%
7.91%
6.17%
5.00%
3.17%
2.67%
4.91%
4.54%
3.70%
-1.06%
0.00%
RLMA 8
-5.00%
-10.00%
6.51%
5.19%
Ouachita
Lincoln
4.60%
-1.98%
-1.48%
Morehouse
-3.91%
5.34%
5.31%
Louisiana
2005-06 qtr2
2006-07 qtr2
2004-07 qtr2
Adjusting for inflation, however, reveals
weaknesses in payroll growth.
Constant dollar change in annualized establishment payrolls
15.00%
9.06%
10.00%
5.00%
0.00%
4.92%
2.85%
2.46%
-0.21% -0.18%
RLMA 8
-5.00%
3.62%
1.63%
1.65%
0.31%
Ouachita
3.18% 2.28%
1.70%
0.99%
Lincoln
-4.30%
2004-05 qtr2
2005-06 qtr2
Morehouse
-5.04%
-7.06%
-10.00%
-10.24%
-15.00%
2.05%
1.86%
Louisiana
2006-07 qtr2
2004-07 qtr2
Job gains in retail, healthcare, hospitality; losses concentrated
in manufacturing, administrative and waste services.
2004 to 2007 changes in employment by occupation RLMA 8 (Q2)
REGIONAL LABOR MARKET AREA 8
Agriculture, forestry, fishing and hunting
Mining
Utilities
Construction
Manufacturing
Wholesale trade
Retail trade
Transportation and warehousing
Information
Finance and insurance
Real estate and rental and leasing
Professional and technical services
Management of companies and enterprises
Administrative and waste services
Educational services
Health care and social assistance
Arts, entertainment, and recreation
Accommodation and food services
Other services, except public administration
Public administration
2004-2
113,615
2,397
283
915
5,907
12,388
3,836
14,504
2,812
2,206
5,421
1,254
3,206
1,959
3,684
13,508
20,078
1,058
8,410
3,291
6,447
2005-2
111,739
2,447
197
915
5,665
12,526
3,886
14,401
2,997
2,108
4,917
1,384
3,147
1,912
3,896
12,315
20,398
1,024
8,093
3,177
6,246
2006-2
112,003
2,182
236
940
5,904
11,649
3,963
14,577
3,019
2,143
4,697
1,577
3,217
1,733
4,505
11,988
20,844
1,106
8,182
3,213
6,232
2007-2
111,395
1,995
346
902
5,720
11,069
3,949
14,920
2,748
2,016
4,766
1,488
3,245
1,678
4,052
12,198
21,199
1,208
8,691
2,928
6,171
Summary and conclusions

Forecasted labor demand for RLMA 8 projects 800 new jobs in
the region by 2010.


Projected payroll growth (2007 $) is approximately $15 million or .65%
of area wages and salaries.
The above forecast underestimates payroll growth if call
center employment rises in accordance with industry forecasts.

300 additional call center jobs can create as much as .5% additional
wage and salary growth.

Further (and highly desirable) growth (and economic diversification) can
be realized from reoccupation of the former Guide plant.
Summary and conclusions

NE LA appears relatively insulated from National economic
issues, though the retail trade remains vulnerable to high
(and forecasted higher) prices for food and fuel.

NE LA never experienced a housing boom and will, therefore, avoid a
housing bust.



Housing price movements are more a function of population pressure
Minimal changes in home prices will allow NE LA to avoid the negative
wealth effects experienced Nationally
On the downside, NE LA workers are relatively disproportionately
affected by inflationary pressures (food and fuel).

The relative purchasing power of wages in NE LA is the focus of our next
topic
Real Wages

It may not be meaningful to compare money wages
across locations or over time
 Variation
in the cost of living
 Inflation

Economists use real wages for such comparisons
 Measures
purchasing power
 Real Wage = money wage/price index
ACCRA Cost of Living Index

Produced by the Council of Community and
Economic Research – C2ER
 Center

for Business and Economic Research
For each Metropolitan Statistical Area (MSA) we
have a cost of living index relative to the national
average
 National
Average = 100
 Monroe = 95.6
 4.4%
below the national average
 116th highest of 234 MSA’s
Wage Index and Real Wages

Using data from the Bureau of Labor Statistics we
develop a wage index for each MSA relative to the
average US wage
 US
average wage = 100
 Monroe = 77.6
 22.4%
below the national average
 214th highest of 234 MSA’s

Real Wage = Wage Index/ACCRA Index
 Gives
the real wage in each MSA relative to the
national average real wage
Wages and Prices
160
Wage Index
140
120
100
80
60
60
80
100
120
ACCRA Index
140
160
180
Statistical Correlations



In general, wages do not keep pace with the cost of
living across MSA’s
For each 10% increase in the cost of living wages
increase by only 7.4%
Consistent with reports of falling real wages
Relative Real Wage Ranking

Relative Real Wage = Wage Index/Price Index
Shows each MSA’s real wage compared to national average
 234 MSA’s in sample

1.
94.
104.
152.
148.
176.
212.
234.
Durham, NC
Jackson, MS
Little Rock, AR
Shreveport, LA
Tyler, TX
Lafayette, LA
Monroe, LA
Honolulu, HI
1.29
.93
.92
.88
.88
.85
.81
.62
Similar Sized Cities



How does Monroe compare to other cities close in
size?
We ranked cities by population size and examined
the 10 cities above and below Monroe in this
ranking
Monroe’s real wages are 20th highest out of 21
cities
 Only
Las Cruces, NM fared worse
Labor Force Participation Rates

Real wages are major determinant of labor force
participation rates
 Our
real wage index explains 30% of variation in
participation rates across MSA’s

Given that we have real wages well below the
national average we should expect that we have a
lower than average labor force participation rate
 Monroe
– 64.7%
 US – 65.9%
Real Wages and LFPR’s
0.9
Labor Force Participation Rate
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
0.6
0.7
0.8
0.9
1
Real Wage Index
1.1
1.2
1.3
1.4
A Closer Look at the Wage Distribution
Percentile
Monroe
All MSA’s
% of All MSA’s
10th
$13,170
$15,890
82.9%
25th
$16,600
$21,177
78.4%
50th
$24,220
$32,260
75.1%
75th
$37,300
$50,921
73.3%
90th
$54,030
$76,386
70.7%
Educational Attainment
Education Level
Monroe – Percent of
Population over 25
US– Percent of
Population over 25
Less than HS
18.3%
15.9%
HS Degree
35.1%
30.2%
Some College
24.6%
26.9%
Bachelor’s Degree
15.9%
17.1%
Graduate Degree
6.0%
19.9%
Education, Wages and Poverty
Education
Level
Median
Wage -Monroe
Median
Wage -- US
% of US
median
Poverty Rate
-- Monroe
Poverty Rate
-- US
Less than HS
$11,941
$18,641
64.1%
34.6%
23.7%
HS Degree
$22,905
$26,123
87.7%
18.8%
11.5%
Some College $27,414
$31,936
85.8%
14.1%
7.8%
Bach Degree
$37,199
$45,221
82.3%
4.7%
4.1%
Grad Degree $46,220
$59,804
77.3%
2.3%
3.1%
Location Quotients


What kinds of jobs do we have relative to the rest
of the country?
For any given industry/occupation the location
quotient, L, is defined
L



= % local employment/% national employment
L < 1 we are below national average
L > 1 we are above national average
L > 1.25 we are an exporter
Industry Location Quotients for Monroe
Industry
Agriculture
Mining
Utilities
Construction
Manufacturing
Wholesale trade
Retail Trade
Transportation
Information
Finance and Insurance
LQ
1.30
0.37
2.39
0.81
1.31
0.94
1.18
0.84
0.91
0.93
Industry
Real Estate
Professional Services
Management
Administrative Services
Educational Services
Health Care
Arts, Entertainment, and Recreation
Food Services
Other Services
Public Administration
LQ
0.31
0.43
1.60
0.57
5.38
1.83
0.45
1.07
0.51
0.41
Occupational Location Quotients
Occupation
Management
Business and financial operations
Computer and mathematics
Architecture and engineering
Life, physical, and social science
Community and social services
Legal
Education, training, and library
Arts, design, entertainment, sports, and media
Healthcare practitioners and technicians
Healthcare support
Protective service
Food preparation and serving
Building and grounds cleaning and maintenance
Personal care and service
Sales and related
Office and administrative support
Farming, fishing, and forestry
Construction and extraction
Installation, maintenance, and repair
Production
Transportation and material moving
Monroe, LA
0.91
0.58
0.44
0.62
0.25
1.12
0.91
1.01
0.73
1.58
1.55
1.14
1.00
0.95
1.06
1.00
0.97
1.60
0.82
1.27
1.01
1.14
Lafayette, LA Jackson, MS
1.05
1.15
0.56
0.79
0.29
0.59
1.22
0.83
0.77
0.47
0.67
0.79
1.03
1.30
0.72
0.99
0.54
0.90
1.20
1.37
1.21
1.32
0.67
1.22
1.07
0.93
0.76
0.94
0.91
0.72
1.05
1.04
1.00
0.99
0.59
0.53
1.29
0.88
1.56
1.01
1.01
1.04
1.23
1.14
Little Rock, AR Shreveport, LA
0.89
1.01
0.92
0.52
0.76
0.26
0.72
0.53
0.80
0.41
1.06
0.93
1.27
0.62
0.92
1.11
0.76
0.61
1.41
1.38
1.22
1.14
0.90
1.31
0.93
1.08
0.98
1.14
0.75
1.32
1.03
0.98
1.03
0.95
0.72
0.58
0.84
1.11
1.10
1.27
0.91
1.00
1.29
1.08
Tyler, TX
0.88
0.47
0.28
0.65
0.51
0.84
0.90
0.94
0.89
1.58
1.78
0.69
1.00
0.99
0.87
1.09
0.97
0.64
0.71
1.32
1.28
1.11
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