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Jim Richardson Louisiana State University October 28, 2010

Factors Affecting the Louisiana Economic Outlook , National and State Factors (including the Oil Spill) presented to Louisiana Industrial Development Executives Association. Jim Richardson Louisiana State University October 28, 2010. National and Global Projected Economic Conditions.

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Jim Richardson Louisiana State University October 28, 2010

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  1. Factors Affecting the Louisiana Economic Outlook, National and State Factors (including the Oil Spill)presented to Louisiana Industrial Development Executives Association Jim Richardson Louisiana State University October 28, 2010

  2. National and Global Projected Economic Conditions

  3. Policy Environment in which Projections are being Made Risks and Uncertainty Current tradeoff

  4. National Risks and Uncertainties • Health Care Reform • Benefits (pre-existing conditions, retirees between age of 55 and 64, children up to age 26, preventive care with no copay) • Mandates (must purchase insurance if in affordability category) • Planned reductions in Medicare • Taxes, pricing decisions, and health care exchanges • Significance of Secretary of Health and Human Services • Changes being phased in from 2010 to 2018 • Energy Policy • EPA and its rulings • Cap and Trade Bill in Congress • Extension of Tax Cuts • 2001 and 2003 tax cuts • Marginal tax rates, dividends and capital gains, estate tax, AMT, Marriage Penalty • Overall Status of Economy—both national and global • Long term concerns about federal indebtedness—gets to entitlements Long-term Structural Changes create Short-term uncertainties

  5. Risks and Uncertainties Specifically Related to Louisiana but can spread to rest of country OIL SPILL AND MORATORIUM/OFFSHORE REGULATIONS

  6. Sectors Affected by Spill and Policy Reactions

  7. Gulf Commercial Fisheries

  8. Louisiana Commercial Fishing Size of Sector Coastal Parishes 15 coastal parishes: 7,959 With >$10,000 annual catch: 2,657 May 2010 trip ticket data Crab: 14% drop Menhaden: 82% drop Oysters:43% drop Shrimp: 49% drop Oyster beds hit hardest Long term effects? • LA Commercial fishing licenses: 11,191 • 2008 dockside value of $275 million • Estimated total annual output of $660 million • Estimated total state tax revenue of $12 million • Estimated total local sales tax revenues of <$10 million

  9. Estimates of Oil Along Gulf Coast Tourism Impact Source: New York Times/NOAA

  10. Louisiana Tourism Composition of Direct 2008 LA Travel &Tourism Value Added by Sector * Millions 2008$ Source: 2008 Tourism Satellite Account.

  11. Louisiana Tourism Size of Sector Coastal Parishes 15 coastal parishes: 36,664 Saltwater Fishing—about 500,000 persons per year $408 million in annual spending for outdoor tourism in coastal parishes Louisiana Wildlife and Fisheries openings pending • 2008 total employment: 144,900 • 2008 direct spending: $9.5 billion • Total annual output of $15.6 billion • Total state tax revenue of $864 million • Total local sales tax revenues of $330 million

  12. Oil and Gas Activities Moratorium on Deepwater Drilling for six months as imposed by U.S. Department of Interior—now lifted but must look over regulations Environmental and Safety Rules as Provided by Bureau of Ocean Energy Management, Regulation, and Enforcement BOEMRE—remove 650 platforms and plug 3,500 wells Drilling Safety Rules—proper cementing and casing practices; appropriate use of drilling fluids, independent review of well design, construction, blowout preventer---reviews signed by Chief Executive Officer subject to criminal penalties Workplace safety rules Other rules in the offing. Overall energy policy

  13. Employment Growth By Region2000 to 2008 Energy

  14. Estimated BP Payments of $1.6 billion for Claims October 2010

  15. Cleanup and Remediation • $9.5 billion reported cost to date • Peak resources: 46,000 people, 7,040 vessels and 121 aircraft • Current resources: 25,200 people, 2,600 vessels and dozens of aircraft

  16. Cleanup and Remediation

  17. LA Net Effect of Oil Spill? Disruption in LA Economy Boost to LA Economy LA Claims to date: $527 million LA spending on clean-up and remediation: $9.5 billion • Industries Affected: • Commercial Marine Fisheries annual dockside value: $275 million • Outdoor tourism in coastal parishes annual spending: $408 million

  18. State Economic Projections

  19. Economic Growth ProjectionsLouisiana, Metros and Rural

  20. Factors Affecting the Louisiana Economic Outlook, National and State Factors (including the Oil Spill)presented to Louisiana Industrial Development Executives Association Jim Richardson Louisiana State University October 28, 2010

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