Slide 1

Slide 2 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) Slide 3 The following presentation will be available for review on-line at: cba.ulm.edu/cber Slide 4 GSP 2004$139,327Rank = 25 GSP 2007$151,039Rank = 25 % change in GSP 2003-05 7.1%Rank = 21 % change in GSP 2005-07 7.0%Rank = 11 Louisiana Gross State Product ($millions): The illusion of our insularity. Slide 5 The importance of oil in Louisianas growth. GDP Growth and Oil Prices (index) Slide 6 United States 200620072008 Employment146,081,000146,294,000143,350,000 Unemployment6,491,0007,541,00010,999,000 Unemployment Rate4.3%4.9%7.1% Labor Force152,572,000153,836,000154,349,000 Louisiana 200620072008 Employment1,922,9431,937,0931,970,615 Unemployment71,65779,895116,172 Unemployment Rate3.6%4.0%5.6% Labor Force1,994,6002,016,9882,086,787 Employment by the Numbers Slide 7 Louisiana employment growth has been relatively strong. Employment data from LA Dept. Of Labor; and U.S. Bureau of Economic Analysis. Slide 8 Employment growth is mostly positive across the State (qtr 2 comparison). LA Dept. of Labor, Laworks.net Slide 9 The relative performance of Northeast Louisiana. OLM = Ouachita, Lincoln, Morehouse Parishes Slide 10 Wage and salary disbursements: US, LA, Monroe. Slide 11 Where there is no housing bubble, there is probably no housing bust. Top ten and bottom ten states for home price appreciation: 2000-2006. Slide 12 Louisiana home prices have remained relatively stable. Bismarck, ND +15% Ft. Meyers, FL -43% Slide 13 Average selling prices of existing homes adjusted for inflation. Data from National Association of Realtors, Northeast Louisiana Realtors Association. Slide 14 Louisiana currently ranks 41 st in foreclosure rate. Foreclosures: NV is #1 WV is #50 National data from RealtyTrac Slide 15 The market for existing homes in NE Louisiana. Slide 16 Home building in Louisiana mostly mirrors the Nation. Slide 17 Permit data from U.S. Census Bureau; and McGraw Hill MarketTrack New Residential Construction Permit Value Slide 18 Construction employment in LA, however, remains stable. Nearly 20% annual increase in Civil Engineering projects. Public projects expected in NE LA include: Delta Community College New Airport Terminal Slide 19 Louisiana lags the Nation in bankruptcies. U.S. Courts: U.S. Dept. of Justice Slide 20 Non-Business Bankruptcies Slide 21 NE LA and the Nation are on the same general retail track Slide 22 Seasonal sales were stronger locally Nov-Dec (seasonal) retail sales: Nation = -5.6%; LA = -1.4%; Ouachita = +1.2% Slide 23 Motor vehicle sales are weak: US = -15.8%, LA sales = -15.6% -12.8% -17.0% Data from Cross-Sell reports -15.6% Slide 24 Estimated value of auto purchases by Ouachita Parish residents. Slide 25 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 Relative economic strength is by no means a certainty in Louisiana Slide 26 Net migration as a % of the 2000 population (2000-2008) Louisiana-6.76% We have shipped more people out of Louisiana than we've attracted Top 3 parishes for population growth Bottom 3 parishes for population growth.Livingston Parish23.55%.St. Bernard Parish-64.19%.Ascension Parish23.27%.Orleans Parish-47.70%.St. Tammany Parish14.83%.Cameron Parish-28.43% Slide 27 Population growth is weak or even non-existent Slide 28 Our 8-year trend is well behind the Nation. Slide 29 Percentage change in Louisiana Monthly Tax Revenues: January/February 2008 to 2009 Current indicated effect on State revenue of Louisiana tax policy change. Slide 30 ($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$1,074.061.0% General Sales tax (excl MV)$495,246.9$460,115.3-7.1% Severance Taxes$176,329.4$119,875.2-32.0% Total State Revenue$1,410,362.2$1,299,058.4-7.9% Year over Year Tax Revenues (to date) by the Numbers Slide 31 Tax burden (ranking) of Louisiana and surrounding states. Slide 32 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 LA policy changes and the (approximate) annual effect on State tax revenue. Add to this amount the effect of a declining tax base (recession) and you have the proverbial billion here, billion there Slide 33 Next up: Determinants of State Tax Revenue Variability. Labor Out-migration by Education and Skill Level.