2009 Business Outlook Summit The Louisiana (and Northeast Louisiana) Economy

1. 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)

2. The following presentation will be available for review on-line at: cba.ulm.edu/cber

3. Louisiana Gross State Product ($millions): The illusion of our insularity.

4. The importance of oil in Louisiana’s growth. GDP Growth and Oil Prices (index)

5. Employment by the Numbers

6. Louisiana employment growth has been relatively strong. Employment data from LA Dept. Of Labor; and U.S. Bureau of Economic Analysis.

7. Employment growth is mostly positive across the State (qtr 2 comparison). LA Dept. of Labor, Laworks.net

8. The relative performance of Northeast Louisiana. OLM = Ouachita, Lincoln, Morehouse Parishes

9. Wage and salary disbursements: US, LA, Monroe.

10. Where there is no housing bubble, there is probably no housing bust. Top ten and bottom ten states for home price appreciation: 2000-2006.

11. Louisiana home prices have remained relatively stable. Bismarck, ND +15% Ft. Meyers, FL -43%

12. Average selling prices of existing homes adjusted for inflation. Data from National Association of Realtors, Northeast Louisiana Realtors Association.

13. Louisiana currently ranks 41st in foreclosure rate. Foreclosures: NV is #1 WV is #50 National data from RealtyTrac

14. The market for existing homes in NE Louisiana.

15. Home building in Louisiana mostly mirrors the Nation.

16. New Residential Construction – Permit Value Permit data from U.S. Census Bureau; and McGraw Hill MarketTrack

17. 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

18. Louisiana lags the Nation in bankruptcies. U.S. Courts: U.S. Dept. of Justice

19. Non-Business Bankruptcies

20. NE LA and the Nation are on the same general retail track

21. Seasonal sales were stronger locally Nov-Dec (seasonal) retail sales:Nation = -5.6%;LA = -1.4%;Ouachita = +1.2%

22. Motor vehicle sales are weak: US = -15.8%, LA sales = -15.6% -15.6% -12.8% -17.0% Data from Cross-Sell reports

23. Estimated value of auto purchases by Ouachita Parish residents.

24. Relative economic strength is by no means a certainty in Louisiana 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

25. We have shipped more people out of Louisiana than we've attracted

26. Population growth is weak or even non-existent

27. Our 8-year trend is well behind the Nation.

28. Current indicated effect on State revenue of Louisiana tax policy change. Percentage change in Louisiana Monthly Tax Revenues: January/February 2008 to 2009

29. Year over Year Tax Revenues (to date) by the Numbers

30. Tax burden (ranking) of Louisiana and surrounding states.

31. LA policy changes and the (approximate) annual effect on State tax revenue. 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 Add to this amount the effect of a declining tax base (recession) and you have the proverbial “billion here, billion there…”

32. Next up: • Determinants of State Tax Revenue Variability. • Labor Out-migration by Education and Skill Level.