Our nation's economy is on fire. Wages are up, unemployment's down, consumer confidence is at an 18-year high, GDP grew by more than four percent last quarter and the stock market continues to rise to uncharted territory. Things are good, really good. But what about Louisiana? Is the state's economy keeping up?
This past week, the Bureau of Economic Analysis reported Louisiana's personal income grew faster than every other state except Texas during the second quarter of this year. Our state's 5.9 percent income growth outpaced the nation's 4.2 percent average increase. This is the second straight quarter income rose in Louisiana. It's a big improvement from 2016, when Louisiana saw the nation's third largest income drop falling almost 2 percent.
The report found Louisiana's construction industry as the leading contributor to the state's 2018 second quarter wage increase.
"This is excellent news, and just another sign that Louisiana is moving in the right direction," Gov. John Bell Edwards said last week in a news release.
But Stephen Waguespack, CEO of the Louisiana Association of Business and Industry and former Gov. Bobby Jindal's chief of staff, says the recent rise in income is mostly a result of the state's construction companies landing big projects around the globe. He says some of the best industrial contractors in the world are based in Louisiana, and they're taking advantage of a resurgence in global manufacturing construction opportunities.
"I love it when our state's construction industry can build these projects all over the world. That's great. But I want them building these projects here so you get the benefit not just from the construction phase income but also the long-term paying jobs. That's when you really have wealth generation for Louisiana, " said Waguespack.
After eight years of pro-business policies under Jindal, we've seen a considerable shift from state leaders. Edwards, along with the Republican-controlled Legislature, has raised utility taxes on businesses, and they've implemented a new manufacturing machinery equipment tax. And without the Legislature, Edwards signed an executive order making it more difficult for manufacturing companies to qualify for the industrial tax exemption program leading to potentially higher property taxes.
"The last several sessions, there's been a repeated attack trying to tax manufacturing inputs. That's the wrong policy if you want to attract those type of jobs," said Waguespack.
And there's also the governor's proclivity toward suing oil companies over coastal erosion. The Wall Street Journal described Edward's approach as a shake-down of the oil industry.
Even with the anti-business policies from state leaders, the rise in income last quarter is undeniable — although workers in Louisiana still earn approximately $7,000 less per year than the average American.
And it's also undeniable Louisiana's economy is improving. In 2017, the state's GDP shrank 0.2 percent. That was the lowest growth in the nation. But the first quarter of this year, the state's GDP grew 2.3 percent. Unfortunately, that was only half the average growth nationally.
“You shouldn’t read too much into it," LSU economist Jim Richardson recently told the Greater Baton Rouge Business Report. "One quarter doesn’t tell you very much at all. What you really want to see is sustainability. It’s encouraging to be going up rather than going down, but we should be cautious until we see long-term trends. ”
The governor says another sign things are improving is that more people are working. But the state's unemployment rate has risen five straight months. Louisiana now has the third-highest jobless rate in the nation.
How you rate Louisiana's economy probably depends on your worldview. Those prioritizing the health and well-being of government over the private sector will say we're doing just fine. Edwards and the Legislature raising more than $7 billion in new taxes have finally calmed the "sky-is-falling-we're-about-to-fall-off-a-fiscal-cliff" crowd. The governor even has a $300 million surplus to play with.
The reality is that when President Donald Trump gutted hundreds of Obama-era, anti-business regulations and lowered taxes, Louisiana, like other states, reaped the benefits, despite state leaders' new bent toward raising tax taxes and suing Louisiana's job creators. Yes, things are improving, despite ourselves.