Thursday, 16 April 2015 13:08
With $1.6B deficit, nothing funny about Jindal's rosy Louisiana economy
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bea-personal-incomeWith Louisiana facing a $1.6B deficit, just how is the state's economy doing so legislators can determine its future revenues based upon growth opportunities.

 

In terms of personal income, according to the federal Bureau of Economic Analysis, Louisiana has been on the lower end of the spectrum the past year and was last during the fourth quarter of 2014.

Fourth quarter personal income

State personal income grew 1.0 percent on average in the fourth quarter of 2014, the same average growth rate as in the third quarter. The acceleration in personal income growth in Florida, Texas, and 30 other states was offset by a slowdown in 15 states, including California and New York. Growth rates ranged from 0.6 percent in Louisiana to 1.5 percent in Texas. The national price index for personal consumption expenditures fell 0.1 percent in the fourth quarter after rising 0.3 percent in the third quarter.

Louisiana’s personal income grew under the national average in 2013-2014 along with that of Mississippi and Arkansas.  The US growth rate during this period was 3.9%.

   (See graph above) 

However according to Louisiana Governor Bobby Jindal, in his speech to the Louisiana legislature on April 13, 2015:


And most importantly, today our economy is booming.  We have more people living in Louisiana than at any time in our state’s history, and more people working in Louisiana than at any other time in our state’s history.  We have 90,000 more jobs from companies that have expanded in our state, and we have many more on the way.

However, the statistics show that job growth in Louisiana is not so rosy.

“The U.S. Department of Labor released its first report Tuesday estimating state employment for 2015, providing hints at where the recovery may be accelerating.

A total of 39 states reported job growth in January, while about half of states recorded declines in their unemployment rates. California added the most jobs for the month (+67,300), followed by Ohio (+25,100) and Michigan (+24,200). In terms of percentage change, Idaho saw its payrolls swell by 1.4 percent -- by far the largest increase of any state.

Meanwhile, three states registered monthly job losses that the Labor Department considered to be statistically significant: Virginia (-10,900), Louisiana (-7,500) and Maine (-3,400).

Following a sluggish recovery period, overall job growth ticked up in recent months. The Labor Department estimates that the economy added 295,000 jobs in February, while the unemployment rate dipped to 5.5 percent.”

job-employment

http://www.governing.com/topics/mgmt/gov-state-job-growth-january-2015-report.html

One other major determinative of economic growth is the gross domestic product.  Louisiana, over the past three years has been grossly outperformed by the US.  The numbers for the past year, 2014, should be released late spring 2015.

But, based upon the most recent stats from the US Bureau of Economic Analysis, we wrote last year:

Yet, from 2010 through 2013, the period in which the Katrina money began to drop and the Jindal economic development policies gained shape, the United States averaged 1.18 percent per year while Louisiana has garnered a meager .2% per year. ……


According to the Associated Press today:

“New figures show Louisiana's economy grew by 1.3 percent in 2013, lagging neighboring states and the nation.
Gross domestic product numbers released Wednesday by the federal Bureau of Economic Analysis try to measure all of the economic output of each state.
Louisiana's 2013 growth rate was below the national average of 1.8 percent, and ranked 34th among the 50 states……

politfact

So, to simplify, as far as GDP goes, here are the comparisons for Louisiana and the US over the past three years in which numbers are available:

Louisiana

United States

2010-2011      -2.6

2010-2011      1.6

2011-2012     1.5

2011-2015       2.5

2012-2013      1.3

2012-2013        1.8

From 2010-13     +.2

From 2010-2013  +5.9

 Yep, you read it right. The US economy from 2010-2013, in terms of average GDP among the states, based upon the stats from the BEA, outgrew the Louisiana economy by almost 30 times.

Again, statistics for 2014 are yet to be released.

So, before the legislature accepts the Jindal's presidential campaign spin of a Louisiana economy being "on fire" under his administration, and the bed of roses he is projecting, perhaps we need to do a reality check and, yes, check the numbers.   

True, Louisiana has grown job opportunities and those are on the way and the governor, his staff, economic developers, others should get strong credit. 

However, those economic development wins of hundreds of jobs here and there are based over years--not now, not in time for this year's or even next year's budget.

As Michael Hecht, President and CEO of GNO Inc. said last week in a Bayoubuzz Google hangout:

When the governor makes an announcement about an 1000- person operation that's opening up--what's not said is that those 1000 jobs are going to come online in about 10 to 12 years. There is a timing delay. So people who have been demanding results of this growth today in terms of the tax revenue actually don't understand that were actually talking short-term future growth not immediate impact and so it's important to make sure that we get the timing in perspective.

Which means Louisiana must tighten its budget and stop playing with funny numbers.  There is nothing funny or rosy about $1.6B deficits.

 

  

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