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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).

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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



The importance of oil in Louisiana’s growth. our insularity.

GDP Growth and Oil Prices (index)


Employment by the Numbers our insularity.


Louisiana employment growth has been relatively strong. our insularity.

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. comparison).

OLM = Ouachita, Lincoln, Morehouse Parishes



Where there is no housing bubble, there is probably no housing bust.

Top ten and bottom ten states for home price appreciation: 2000-2006.


Louisiana home prices have remained relatively stable. housing bust.

Bismarck, ND +15%

Ft. Meyers, FL -43%


Average selling prices of existing homes adjusted for inflation.

Data from National Association of Realtors, Northeast Louisiana Realtors Association.


Louisiana currently ranks 41 inflation.st in foreclosure rate.

Foreclosures:

NV is #1 WV is #50

National data from RealtyTrac




New Residential Construction – Permit Value inflation.

Permit data from U.S. Census Bureau; and McGraw Hill MarketTrack


Construction employment in LA, however, remains stable. inflation.

  • 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. inflation.

U.S. Courts: U.S. Dept. of Justice




Seasonal sales were stronger locally inflation.

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%

-15.6%

-12.8%

-17.0%

Data from Cross-Sell reports



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





Current indicated effect on State revenue of Louisiana tax policy change.

Percentage change in Louisiana Monthly Tax Revenues: January/February 2008 to 2009




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 -$410,000,000

Total estimated shortfall -$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: State tax revenue.

  • Determinants of State Tax Revenue Variability.

  • Labor Out-migration by Education and Skill Level.


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