Should We Talk About Louisiana’s Continuously Crappy Economy?

At this point it isn’t really news anymore that Louisiana’s economy continues to underperform, but yesterday there was a bit of buzz about a new 24/7 Wall Street study, referenced by USA Today, which panned the Bayou State as one of the nation’s worst economic backwaters.

48. Louisiana

  • 5 yr. GDP annual growth rate: -0.1% (3rd largest decrease)
  • 2017 GDP: $207.9 billion (25th largest)
  • June 2018 Unemployment: 4.7% (tied — 4th highest)
  • 5 yr. annual employment growth: +0.4% (2nd smallest increase)

Louisiana is one of several states with largely resource-based economies to rank among the bottom five. The state’s employment in resource extraction is higher than the average nationwide, and petroleum refining and petroleum and coal products are far and away the state’s largest exports. The global dip in oil prices in 2014 that continued through 2016 likely hindered economic growth in the state. Over the last five years, the state’s GDP declined by an annual average of 0.1% — the third lowest five-year change of all states. The decline in economic output came despite a 1.8% population increase over the same period.

Joblessness is a considerable problem in Louisiana. The state’s 4.7% unemployment rate is among the highest in the country and well above the 3.8% U.S. unemployment rate.

We’re not sure about the 1.8 percent population increase, because census numbers have Louisiana’s population dropping rather than increasing…

After hitting 4,686,157 residents in 2016, the state actually lost population over the past two years and is down to 4,682,509 in 2018, a net loss of 3,648 people. The projection for 2020 is  4,678,861, a total drop of more than 7,000 over four years.

Louisiana’s population is, however, up by three percent since 2010. In that same time period Texas’ is up by 13 percent and Florida’s by 12 percent.

People go where the jobs are. And some of this, where oil and gas are concerned, was unavoidable – the Permian Basin and Eagle Ford plays in West and South Texas are where the action is, while Louisiana was destined to be something of a backwater without a major “wet” (meaning, containing oil, which excludes the Haynesville Shale which is all natural gas) shale play ready for massive investment. But that was obviously made worse when the governor teamed up with a cabal of trial lawyers to drum up coastal lawsuits against the oil and gas industry, which has greatly depressed activity in that sector and run whatever energy jobs the state might have retained right out of markets like Lafayette and Houma/Thibodaux.

And beyond that, Louisiana has the tail end of the industrial construction boom which contributed what economic growth the state has had over the past five years.

Otherwise? It’s a disaster. Only West Virginia and Alaska are worse.

Gov. John Bel Edwards and his defenders are singing a different tune, of course. They say Louisiana’s economic recession is over and the state’s booming right now – you just haven’t noticed it yet. For example, Louisiana’s economy grew at a 2.3 percent pace in the first quarter of this year, which was a little faster than the national average and beat most of the Southern states (though definitely not Texas, which grew at 2.9 percent and Florida, which grew at 2.5 percent). Edwards has been touting a few economic development wins like the $1.5 billion Shintech expansion in Plaquemine or the DXC (New Orleans) and CGI (Lafayette) tech sitings.

Except nobody’s really buying that, as Stephanie Riegel noted earlier this month at the Baton Rouge Business Report. The fundamentals of the state’s economy are terrible and everybody knows it, and what’s more there is nothing being done to improve them.

Education? There isn’t much happening to make Louisiana look like it’s getting out of the cellar in the state-by-state rankings either in K-12 or in higher education. So there is little reason to believe we’re developing a workforce full of entrepreneurs who can create a booming economy with new businesses competitive on a national level.


Tax policy? If anything, that’s gotten worse – Louisiana replaced a one cent sales tax with essential a half-cent sales tax, while doing nothing to improve an income tax system which isn’t competitive with Texas and Florida, and the stupid decision to put the Industrial Tax Exemption Program (ITEP) in the hands of local governments (and, worst of all, the entry-level politicians on school boards) means that Louisiana’s industrial players will be less and less interested in keeping the current capital expansion going.

Infrastructure? There is no current movement toward reprioritizing government dollars toward the building and improvement of roads either at the state or local level. Instead there are local tax increases dedicated to roads on the ballot in Baton Rouge and a few other places, plus talk of a gas tax increase proposal in next year’s legislative session that will not pass. Yes, there are projects to widen I-10 in a couple of places. For a state with as choked and insufficient an infrastructure as Louisiana has, that’s hardly sufficient.

Corruption? We know that’s getting worse. In New Orleans the public agency in charge of the water supply can’t even properly account for its customers’ bills, though its employees can count well enough to give themselves pay increases and force the mayor to clean house to put her own flunkies in charge. And at the state level they’re still digging out from the damage done by Edwards’ sexual-harassing deputy chief of staff, hired despite an established record of bad behavior simply out of political patronage. Not to mention the sewer of sleaze that the State Police has become.

It goes on and on.

You can’t escape this sort of malaise without leadership – whether elected or otherwise. Louisiana looks a lot like it did in the latter days of Kathleen Blanco’s governorship, in which the people of the state are possessed with a general feeling that it’s just better elsewhere and things won’t ever change. Back then, of course, there was an excuse – Hurricane Katrina had demolished the state’s largest population center in late August 2005. There is no such catastrophe now, which in a way makes things worse.

Someone is going to have to stand up and lead, or else things will continue to stagnate. By now it’s obvious Edwards won’t do that – he’s busy trying to pose as a “conservative” where he can, in pursuit of his re-election, and his achievements as governor to date are a criminal justice reform package which will be a political albatross around his neck and a Medicaid expansion which will absolutely break Louisiana’s public fisc in the next 5-10 years. So it’s going to have to be someone who beats Edwards in the 2019 elections, or a business leader, or the Saints, or LSU, or something to give the people of the state reason to believe in ourselves again.

Because increasingly, we don’t right now. And those economic numbers reflect as much.



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