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Jindal economic miracle, a fact, myth or a lie?
Written by  // Tuesday, 23 June 2015 13:27 //

jindal-state-of-unionby Stephen Sabludowsky

When Louisiana Governor Bobby Jindal faces the nation tomorrow, as he announces his official run for President of the United States, there are certainties.

He will criticize President Obama and Hillary Clinton and the democrats.  He will warn us about the war on religious liberty.  He will boldly state he has successfully balanced the budget every year without raising taxes.  He will tell the world that Louisiana’s economy, under his leadership has performed miracles, thus, the country can anticipate the same under his stewardship--if he were president.

 As he has done often in the past, he will likely boast that the Louisiana economy has grown "twice as fast as the national economy" and has “grown 50 percent faster than the national GDP”.

What he will fail to mention is the truth.  Louisiana has decidedly underperformed the rest of the nation in terms of GDP (and GSP the Gross State Product), the important criteria Jindal has cited in making his case and the criteria which measures a state and nation’s productivity success, from one year to the next and from one period to another.

The last statistic, showing 2014 performance continues the long Louisiana economic slide downward.  The nation’s GDP again eclipsed Louisiana’s by .3 points—2.2 to 1.9.

What is the GDP?  According to a media release dated June 15 from the Bureau of Economic Analysis

GDP by state is the state counterpart of the Nation's gross domestic product (GDP), the Bureau's featured and most comprehensive measure of U.S. economic activity. GDP by state is derived as the sum of the GDP originating in all the industries in a state.

The statistics of real GDP by state are prepared in chained (2009) dollars. Real GDP by state is an inflation–adjusted measure of each state's gross product that is based on national prices for the goods and services produced within that state.

Below is a grid from the BEA (federal government) showing the comparative GDP of Louisiana to the nation for the relevant period (Jindal took office in January 2008).  The date range, 2007-2008 is the GDP growth of 2008 compared to the year prior (2007) just as 2013-2014 reflects the GDP growth of 2014 compared to 2013:   

stats-gdp

Here is the same information in the chart below including the cumulative findings and annual growth percentages.

 

LOUISIANA

US

2008

0.5

-0.5

2009

2.3

-2.7

2010

4.8

2.2

2011

-3.4

1.4

2012

1.9

2.1

2013

-2.5

1.9

2014                                    

1.9

2.2

Total over seven years

5.5

6.6

Avg. per year

0.7857

0.0943

 Louisiana's real GDP has not been growing fifty-percent faster than the nation’s real GDP as Jindal wants us to believe.  Instead, Louisiana has grown at a year-to-year rate significantly below the national average rate during Governor Jindal’s term in office and is ranked no more than 24th in the nation for economic growth. 

Louisiana’s total growth from year to year (Real GDP) for the seven years of the Jindal administration is 5.5 points.  This 5.5 % is broken down to a meager 0.7857 percentage points growth per year.

The United States cumulative GDP is 6.6 or 0.0943.  

Employing simple mathematics, the nation has outperformed Louisiana by an cumulated 1.1 points over the seven years, or by 0.1571 per year.  Using this method of adding the percentage points and dividing by the number of years, this differential means Louisiana’s GDP is 83% of the nation’s GDP under the Jindal years.  For Louisiana’s GDP to be 50 percent more than the national GDP as Jindal asserts, Louisiana 2008-2014 GDP would need to show a 9.9 overall growth, not the lowly 5.5 percentage points.  In more simple terms, for Jindal to be accurate, Louisiana’s growth would need to be 180%  greater than its  current 2008-2014 GDP, as reported by the federal government.

THE KATRINA FACTOR

Looking back, the Louisiana economic productivity during Jindal’s tenure as governor has been overwhelmingly assisted by a one-time cataclysmic chain of events event-- Hurricane Katrina and its massive recovery.  Without doubt, the massive infusion of federal dollars and insurance proceeds due to the Hurricane Katrina disaster is unquestionably one of the overwhelming reasons that Louisiana’s GDP has even come close to being 83% of the nation’s GDP. 

Again, let’s look at the charts factoring in and out the Katrina-aid flow:

 

LOUISIANA

US

2008

0.5

-0.5

2009

2.3

-2.7

2010

4.8

2.2

Total over two years

7.6

-1.00

Avg. per year

2.53

-0.33

Louisiana’s Hurricane Katrina money spike reflecting billions of dollars pumped into the state artificially raised the state’s GDP during the first three years under the Jindal administration.  Louisiana’s 2010 productivity skyrocketed to 4.8 points even compared to the prior year 2009.  During that same year, rocked by the great recession, the nation’s GDP only grew by 2.2 percentage points.  Through the relevant Katrina-money years (2007-2010), Louisiana’s cumulative growth outpaced the US with a spectacular 7.6  GDP to that the nation’s -1.0.  The average yearly growth for Louisiana during this period was 2.53 compared to a negative growth for the nation, –0.33.

However, starting in 2011, the nation rebounded with a vengeance compared to Louisiana.  For four consecutive years, 2011-2014, Louisiana has badly trailed the US.   As the numbers below reflect, Louisiana’s GDP registered an anemic cumulative 2.1 GDP compared to the nation’s whopping GDP 7.4.  Accordingly, Louisiana’s annual average 0.52 has been significantly dwarfed by the nation’s 1.90.

 

LOUISIANA

US

2011

-3.4

1.4

2012

 1.9

2.1

2013

-2.5

1.9

2014

1.9

2.2

Total over four years

2.1

7.6

Avg. per year

0.52

1.9

The GDP statistics actually are worse when deploying a different BEA tool to compare one period of time to the other.  Deep drilling into the BEA database, to access the Real GDP in chained dollars over the 2008-2014 using BEA’s recommended compound annual growth rate method reveals that Louisiana’s growth is .8 whereas the nation’s growth is 1.2.  Thus, instead of Louisiana performing at a rate of 83% percent of the nation, the state has performed 66% of the nation’s GDP (see link).

regional


JINDAL’S LOUISIANA MIRACLE AS EXPLAINED BY GOVERNOR JINDAL AND CO.

As discussed above, Louisiana’s cumulative GDP from 2008-2014 has been 83% of the nation’s GDP at best and 66% of the nation, at worse.   But, what has the governor and his staff been telling the nation?  A total different story, akin to the “Jindal miracle”.  Unfortunately, many in the media and elsewhere have adopted Jindal's self-promotions without any further investigations.

Here are just a few of the representations he and others have been making to the nation:

"Louisiana’s state GDP has grown by $36 billion since 2008 and it’s growing at nearly twice the rate of our nation’s GDP. In fact, Louisiana’s GDP growth over the last five years ranked eighth best in the U.S. and third best in the South"

http://www.rga.org/americancomeback/bobby-jindal/

“Our economy has grown 50 percent faster than the national GDP, even since the national recession."—Jindal on Morning Joe, MSNBC Feb. 2012

http://www.politifact.com/truth-o-meter/statements/2014/feb/27/bobby-jindal/bobby-jindal-says-louisianas-growth-has-outpaced-n/ 

“Since 2008, Louisiana's economy has grown nearly twice as fast as the national economy”—Jindal oped in USAToday. May 2015

http://www.usatoday.com/story/opinion/2015/03/08/tax-cuts-louisiana-gov-bobby-jindal-editorials-debates/24613069/

“Our economy has grown twice as fast as the national economy”— This Week with George Stephanopoulos May 2015

In fact, in a legislative hearing to discuss the executive budget to explain how the governor would fix a $1.6B deficit , the Jindal administration reported:

“Since January 2008, Louisiana’s real GDP (gross domestic product) has grown by $17.98 billion, or 8.8 percent. That represents GDP growth that is nearly 86 percent faster than the nation and 38 percent faster than the South”

http://doa.louisiana.gov/doa/Presentations/FY16%20Budget%20Highlights.pdf

So, which is it?  Twice as fast as the nation’s economy?  Fifty-percent faster than the national GDP?  Or two-thirds as fast as the national GDP and the nation’s economy?

According to the StatsAmerica’s US States in Profile,  from the years 2010 through 2014 (which would be the years that Jindal’s policies would really kick in), Louisiana ranked no better than 24th.  Actually, when comparing the year 2010 to 2014,

profile

 

 stats-new

The state even ranked 51st, when comparing the year 2010 to 2014 since Louisiana GDP was five billion dollars stronger in 2010 compared to 2014 in adjusted dollars.

In an email request to explain the stats further, Brittany Johnson, Indiana Business Research Center, IU Kelley School of Business, wrote:

"As a state, Louisiana produced $220,995,000 of real gross domestic product in 2010. In 2014, the state produced $215,968,000, which was a $5,027,000 decrease. Of all 50 states and the District of Columbia, that was the biggest negative change. For example, Texas produced $266,241,000 more in 2014 than in 2010 - which put them in first in the rank list. Louisiana made $5,027,000 less, which makes it the state with the largest negative change between 2010 and 2014".

What about the years, 2008-2009?

According to the List of US states by GDP, in 2008, Louisiana was ranked 23rd in GDP with $222,218 billion and 24th in 2009 with $208,377.  Again, that number climbed in 2010 to $220,995 in GDP.

THE JINDAL SPIN WIN?

Where has Governor Jindal and his administration obtained those glowing figures of Louisiana’s miracle growth?  Hopefully, as the scrutiny increases to test his past performances and his personal credibility, he will provide details that he nor his administration has provided to date. 

Moreover, now that Jindal is entering the national market as a real-live presidential candidate, the national media and other candidates can begin to probe further into the facts rapidy spewed out of Bobby Jindal.  Right now, roughly 30% of Louisiana voters view him favorably.   He will tell the world he has balanced the budget without raising taxes which statement just about everybody but the governor believes to be a total farce.  Only weeks ago, the state legislature passed over 700 million dollars worth of taxes most upon businesses in Louisiana.  The governor, under the threat of budget veto, concoted the SAVE act which did nothing but create a bogus tax credit that he could use to say the budget was revenue neutral.  A scam. The governor can play will funny numbers in creating a budget and even funnier numbers in promoting his job performance.

America needs to get used to his distortions.  Just ask those in Louisiana if they want the truth.

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