Louisiana Economic Situation October 2022
Key Point: Louisiana’s labor market looks okay on the surface but the working-age population is 12,366 (-0.35%) below pre-shutdowns in February 2020 and private sector employment remains 35,900 (-2.2%) below then. Moreover, the decline in real GDP annualized growth in Q2:2022 of 3% was the 5th worst in the nation.
Labor Market: The best path to prosperity is a job, as work brings dignity, hope, and purpose to people by allowing them to earn a living, gain skills, and build social capital that endures. The table below shows Louisiana’s labor market over time according to the U.S. business cycle until the latest data for September 2022. Net total nonfarm jobs in the state increased by 5,000 last month, resulting in increases for 11 of the last 12 months but remains 56,900 jobs below the pre-shutdown level in February 2020 while the working-age population is down 12,366 since then. Compared with a year ago, total employment was up by 95,600 (+5.2%) with the private sector adding 98,100 jobs (+6.4%) and the government cutting 2,500 jobs (-0.8%). The labor force participation rate of 58.5% is 0.1-percentage point lower than it was in February 2020 but well below June 2009 at the trough of the Great Recession. The employment-population ratio is 1-percentage point below where it was in February 2020, and the private sector employs 35,900 (-2.2%) fewer people than then. Louisianans still face challenges given these latest figures for the labor market and remain well below the pre-shutdown trend.
Economic Growth: The U.S. Bureau of Economic Analysis (BEA) recently provided the real gross domestic product (GDP) for Louisiana and others states. The following tells the story of the U.S. and Louisiana economies over the last two and a half years. The steep decline was during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered. The decline in real GDP annualized growth in Q2:2022 of 3% was the 5th worst in the nation. The BEA also reported that personal income in Louisiana grew at an annualized pace of 5.8% (19th best) in Q2:2022 (tied +5.8% U.S. average).
Bottom Line: Louisianans continue to feel the effects of the shutdowns in 2020 and policies that are too restrictive in allowing more economic growth and prosperity with well-paid jobs. This has influenced a net outmigration of Louisianans to other states over time, which is a drain on the state’s economic potential now and in the future. State and local policymakers should work to reverse this trend by passing pro-growth policies following the Pelican Institute’s roadmap for a comeback story.
Recommendations: In 2023, the Louisiana Legislature should provide the state’s comeback story by:
Originally posted at Pelican Institute
Vance Ginn, Ph.D.