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
Louisiana Gross State Product ($millions): The illusion of our insularity.
GSP 2004
$139,327
Rank = 25
GSP 2007
$151,039
Rank = 25
% change in GSP
2003-05
7.1%
Rank = 21
% change in GSP
2005-07
7.0%
Rank = 11
Per Capita GSP Growth: State Ranking
Rank 2003-2005 Rank 2005-2007
Idaho
1
46
Nevada
2
48
California
3
18
Florida
4
41
Louisiana
12
1
The importance of oil in Louisiana’s growth.
GDP Growth and Oil Prices (index)
4
3.5
3
us
2.5
oilpx
la
2
1.5
1
2001
2002
2003
2004
2005
2006
2007
Employment by the Numbers
United States
Employment
Unemployment
Unemployment Rate
Labor Force
2006
2007
2008
146,081,000
146,294,000
143,350,000
6,491,000
7,541,000
10,999,000
4.3%
4.9%
7.1%
152,572,000
153,836,000
154,349,000
Louisiana
Employment
Unemployment
Unemployment Rate
Labor Force
2006
2007
2008
1,922,943
1 ,937,093
1,970,615
71,657
79,895
116,172
3.6%
4.0%
5.6%
1,994,600
2 ,016,988
2,086,787
Louisiana employment growth has been relatively strong.
Employment Index: US and Louisiana (1998=100)
1.11
1.09
1.07
USA
Louisiana
1.05
1.03
1.01
0.99
0.97
0.95
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
(dec)
Pct Change in Unemployment Claims Jan 2008-Jan 2009
United States
Louisiana
Initial claims
63.00%
35.90%
Continuing claims
72.90%
35.10%
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).
Covered Jobs Index by region (2004=100)
1.2
1.15
1.1
NEW
1.05
BTR
HOU
1
LAF
LCH
0.95
AEX
0.9
SHV
MLU
0.85
State
0.8
0.75
2004-2
LA Dept. of Labor, Laworks.net
2005-2
2006-2
2007-2
2008-2
The relative performance of Northeast Louisiana.
Employment Index Northeast LA (1998=100)
1.06
1.04
Louisiana
1.02
Monroe-Bastrop
1
OLM
0.98
0.96
1998
1999
2000
2001
2002
2003
Louisiana
Dec-06
Dec-08
Employed
Unemployed
Unemployment rate
Labor force
1,922,943
71,657
3.6%
1,994,600
1,970,615
116,172
5.6%
2,086,787
OLM = Ouachita, Lincoln, Morehouse Parishes
2004
2005
2006
2007
NE LA
OLM
Dec-06
Dec-08
Dec-06
Dec-08
147,190
10,588
6.7%
157,778
144,700
11,175
7.2%
155,875
97,520
4,050
4.0%
101,570
96,506
6,746
6.5%
103,252
Wage and salary disbursements: US, LA, Monroe.
Wage and Salary Disbursements Index (constant $ 1998=100)
1.35
1.3
1.25
1.2
Monroe, LA (MSA)
1.15
United States
1.1
Louisiana
1.05
1
0.95
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Where there is no housing bubble, there is probably no housing bust.
Top ten and bottom ten states for home price appreciation: 2000-2006.
Rank
1
2
3
4
5
6
7
8
9
10
state
HAWAII
NEVADA
DELAWARE
PENNSYLVANIA
VIRGINIA
MARYLAND
CALIFORNIA
FLORIDA
ARIZONA
Wash DC
apprec
121.0%
120.4%
119.8%
93.3%
93.0%
92.8%
90.8%
87.3%
84.9%
83.4%
Rank
41
42
43
44
45
46
47
48
49
50
state
MISSISSIPPI
MISSOURI
COLORADO
GEORGIA
INDIANA
SOUTH DAKOTA
OKLAHOMA
TEXAS
NEBRASKA
MICHIGAN
38 Louisiana
30.4%
** UNITED STATES
51.0%
apprec
22.6%
20.7%
18.8%
15.7%
15.0%
11.2%
8.2%
6.8%
5.5%
5.4%
Louisiana home prices have remained relatively stable.
Median
Exisitng
2006-2008
Median
Exisitng
HomeHome
PricesPrices
2006-2008
($ 000's) ($ 000's)
$250.0
$250.0
$200.0
$200.0
$150.0
$150.0
2006
2007
2008
$100.0
$100.0
$50.0
$50.0
2006
2007
2008
$0.0
$0.0
U.S.
U.S.
Average current $000
U.S.
Baton Rouge
N. Orleans-Met.-Ken.
Shreveport-Bossier
Northeast LA
Baton Rouge
N. Orleans-
Shreveport-
Northeast LA
Baton Rouge
N. OrleansMet.-Ken.
Bossier Shreveport- Northeast LA
Met.-Ken.
Bossier
2006
2007
2008
%change 2006-2008
$221.9
$169.5
$173.1
$132.2
$127.3
$217.9
$174.4
$160.3
$135.6
$129.8
$197.1
$165.0
$160.5
$138.5
$127.8
-11%
-3%
-7%
5%
0%
Bismarck, ND
+15%
Ft. Meyers, FL
-43%
Average selling prices of existing homes adjusted for inflation.
Avg const $000
2006
U.S.
$237.0
Baton Rouge
$181.0
N. Orleans-Met.-Ken.
$184.9
Shreveport-Bossier
$141.2
Northeast LA
$136.0
2007
2008
%change 2006-2008
$226.3
$181.1
$166.5
$140.8
$134.8
$197.1
$165.0
$160.5
$138.5
$127.8
-17%
-9%
-13%
-2%
-6%
Data from National Association of Realtors, Northeast Louisiana Realtors Association.
Louisiana currently ranks 41st in foreclosure rate.
Percentage Change in Existing Home Sales
0.0%
-1.2%
-5.0%
-10.0%
-10.0%
2006-2007
-12.8% -13.1%
2007-2008
-15.0%
-17.8%
-20.0%
-22.1%
-25.0%
U.S
LA
NELA
Home Foreclosure Rate (percent): 2007-2008
Foreclosures:
AR
NV is #1
WV is #50
MS
2008
TX
Ouachita Parish Foreclosures
2004 2005 2006 2007 2008
593
486
601
655
601
National data from RealtyTrac
2007
LA
US
0
0.2
0.4
0.6
0.8
1
Percent
1.2
1.4
1.6
1.8
2
The market for existing homes in NE Louisiana.
Constant dollar list and sell price (NE LA)
$155,000
$150,000
$145,000
ListPrice
soldprice
$140,000
$135,000
HSQFT
Days On Market
Number sold
new listings
excess inventory
$130,000
2006
2007
2008
Constant dollar price per HSQFT
2008
$75.14
2007
$78.35
2006
$72.00
Price per
HSQFT
$78.19
$74.00
$76.00
$78.00
$80.00
2006
1,877
115
1993
2892
899
2007
1,873
114
1970
2862
892
2008
1,848
122
1773
2753
980
Home building in Louisiana mostly mirrors the Nation.
Percentage Change in Number New Residential
Construction Permits 2007-08
0.0%
-5.0%
M onroe M SA
Louisiana
Unite d State s
-10.0%
-15.0%
-20.0%
2007-08 % chg
-25.0%
-30.0%
-29.8%
-35.0%
-35.3%
-40.0%
-45.0%
-40.9%
New Residential Construction – Permit Value
Percentage Change in Value of New Residential
Construction Permits 2007-08
0.0%
-5.0%
Monroe MSA
Louisiana
United States
-10.0%
-15.0%
-20.0%
%chg
2007-08
-25.0%
-30.0%
-27.6%
-35.0%
-40.0%
-45.0%
-37.1%
-40.5%
Permit data from U.S. Census Bureau; and McGraw Hill MarketTrack
Construction employment in LA, however, remains stable.
United States
Louisiana
Construction Employment
Dec-08
Dec-07
6,841,000
7,475,000
138,400
135,400
12 month change
-634,000
3,000
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.
Percentage Change in Business Bankruptcies 2007-2008
45.0%
41.6%
40.0%
35.0%
26.6%
30.0%
25.0%
20.0%
% change 2007-08
8.6%
15.0%
10.0%
5.0%
0.0%
US
U.S. Courts: U.S. Dept. of Justice
LA
LA-West
Non-Business Bankruptcies
Percentage Change in Non-Business Bankruptcies 2007-2008
28.4%
30.0%
25.0%
20.0%
14.5%
12.6%
% change 2007-08
15.0%
10.0%
5.0%
0.0%
US
LA
LA-West
NE LA and the Nation are on the same general retail track
Retail Sales Index (MV excluded; 2004=100)
1.25
1.2
1.15
US
1.1
NE LA
1.05
1
0.95
2004
2005
2006
2007
% change 2007-09
US
Louisiana Ouachita
2.8%
1.7%
2.8%
(excludes Motor vehicles)
2008
Seasonal sales were stronger locally
Estimated retail sales index: Ouachita Parish (2004=100)
1.25
1.2
1.15
Less MV sales
1.1
With MV sales
less MV constant
$
1.05
1
0.95
2004
2005
2006
2007
2008
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%
NE Louisiana New Vehicle Registrations
LA New Vehicle Registrations
157,665
160,000
12000
126,574
10,201
8,418
140,000
98,083
120,000
10000
89,258
8000
100,000
2007
80,000
2008
60,000
4,462
6000
4,376
2007
2008
4000
40,000
2000
20,000
0
LA LT & Vans
LA Cars
-15.6%
NELA Dealer Sample
Data from Cross-Sell reports
0
NELA LT & Vans
2007
11,963
2008
9,925
NELA Cars
-17.0%
-12.8%
Estimated value of auto purchases by Ouachita Parish residents.
Parish auto purchases index
1.11
1.09
1.07
1.05
1.03
1.01
0.99
auto sales index
0.97
0.95
2004
2005
2006
2007
2008
Relative economic strength is by no means a certainty in Louisiana
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
We have shipped more people out of Louisiana than we've attracted
Net migration as a % of the 2000 population (2000-2008)
Louisiana
-6.76%
Top 3 parishes for population
growth
Bottom 3 parishes for population
growth
.Livingston Parish
23.55%
.St. Bernard Parish
-64.19%
.Ascension Parish
23.27%
.Orleans Parish
-47.70%
.St. Tammany Parish
14.83%
.Cameron Parish
-28.43%
Population growth is weak or even non-existent
Percentage Change of Population
2007 to 2008
2.7%
3.0%
2.0%
0.9%
0.4%
1.0%
0.1%
0.0%
USA
LA
NELA
OLM
Our 8-year trend is well behind the Nation.
Percentage Change of Population - 8 Years
2000 to 2008
8.0%
8.0%
6.0%
4.0%
0.1%
2.0%
0.0%
-1.3%
-2.0%
-2.2%
-4.0%
USA
LA
NELA
OLM
Current indicated effect on State revenue of Louisiana tax policy change.
Percentage change in Louisiana Monthly Tax Revenues: January/February 2008 to 2009
0.0%
-5.0%
-0.3%
-2.5%
-10.0%
-1.2%
-3.7%
-5.8%
-7.1% -7.9%
-13.8% -13.1%
-15.0%
-11.3%
-20.0%
-23.4%
-25.0% -24.2%
Individual withholding
Individual total
-20.8%
General Sales tax
-30.0%
Severance Taxes
-32.0%
-35.0%
-40.0%
-40.1%
-45.0%
Jan
Feb
Combined
Total State Revenue
Year over Year Tax Revenues (to date) by the Numbers
($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
$1,074.0
61.0%
General Sales tax (excl MV)
$495,246.9
$460,115.3
-7.1%
Severance Taxes
$176,329.4
$119,875.2
-32.0%
$1,410,362.2
$1,299,058.4
-7.9%
Total State Revenue
Tax burden (ranking) of Louisiana and surrounding states.
Data from FY 2005-2006 (U.S. Census Bureau)
State and local taxes per capita
State and local taxes per $1,000 personal income
State and local sales tax per capita
Individual income tax per capita (rank out of 43)
Tax Burdens: State Ranking
LA
TX
MS
AR
26
40
49
44
8
45
27
21
4
18
14
7
37
n/a
41
31
LA policy changes and the (approximate) annual effect on State tax revenue.
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
Total estimated shortfall
-$410,000,000
-$960,000,000
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.