Louisiana Economic Situation—August 2023

Louisiana Economic Situation—August 2023

Louisiana has many fantastic resources with educated people, eccentric culture, robust ports, abundant oil and gas production, and much more yet poor public policies stifle this potential, highlighted by job losses in July 2023. The Pelican Institute’s “Comeback Agenda” shows the path forward to let people prosper.

Table 1 provides Louisiana’s key labor market information over time, including the latest data for July 2023 that was recently released by the U.S. Bureau of Labor Statistics.

These data indicate some strength on the surface, but we must look deeper to see how Louisianans are really doing in this economy.

Louisiana’s unemployment rate is lower but for the wrong reasons as people continue to leave the labor force.

  • The working-age population declined by another 521 people last month to 3.54 million. This is down 9,315 people over the last year and down 35,453 people since February 2020.
  • The civilian labor force, defined as those who are working or looking for work, declined by 9,527 to 2.10 million people last month, increased by 20,191 people over last year, and up 15,067 people since February 2020.
  • The labor force participation rate is 59.3%, which is up from 58.5% from last year and up from 58.3% since pre-shutdown but well below the 61.5% rate in December 2007 before the Great Recession.
  • With fewer people in the labor force over time as people are leaving the Pelican State or not joining the labor force for a variety of reasons thereby contributing to a lower unemployment rate of 3.4%.

Louisiana’s lost 3,900 nonfarm jobs over the last two months after losing 3,000 jobs in July 2023.

  • Louisiana’s net total nonfarm jobs declined by 3,000 jobs last month (8th most jobs lost of any state) to 1.96 million employed, which June 2023 was revised down to a decline of 900 jobs.
  • Nonfarm jobs are 35,700 jobs below the pre-shutdown level in February 2020, making Louisiana one of only 10 states to not have regained all the jobs since then.
  • Private sector employment declined by 3,100 jobs last month to 1.64 million and government employment increased by 100 jobs to 315,600 last month.
  • Compared with a year ago, total employment was up by 30,200 jobs (+1.6%), with the private sector adding 25,600 jobs (+1.6%) and the government adding 4,600 jobs (+1.5%).
  • This results in about 85% of all nonfarm jobs being in the productive private sector while 15% is in the government sector, which is the same as the share for the entire U.S.
  • There is growing weakness in the labor market with job losses and average weekly earnings not rising as fast as inflation in most sectors (Figure 1)

Overview of the labor market in industries in Louisiana.

Figure 1. Louisiana’s Labor Market by Industry

Source: U.S. Bureau of Labor Statistics

  • The industries leading the way in increases in employment are mining and logging, construction, and financial activities while trade and other services have the largest declines.
  • Average weekly hours have increased in most industries while trade and manufacturing have declined.
  • With the consumer price index inflation at 3.3% over the last year, people with jobs in most industries have declining purchase power though average weekly earnings in mining and logging, construction, and financial activities are above it.
  • Overall, these data show the hardship that many Louisianans are facing across the state.

Compared with neighboring states based on several measures there continue to be major concerns with the labor market and other areas in Louisiana. Another one of those is economic growth.

Table 2 shows how the U.S. and Louisiana economies performed since 2020, as reported by the U.S. Bureau of Economic Analysis.

  • The steep declines were during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered most.
  • Figure 2 shows how the increase in real GDP in Louisiana of +1.4% in Q1:2023 ranked 31st in the country to $289.9 billion, after an annual decline in economic output by -1.8% in 2022 which was the second worst in the country.

Figure 2: Real GDP Growth by State in Q1:2023

Source: U.S. Bureau of Economic Analysis

  • The BEA also reported that personal income in Louisiana grew at an annualized pace of +6.2% (ranked 27th) to $258.5 billion in Q1:2023 (above +5.1% U.S. average). There was personal income growth of 0.0% in 2022, ranking 50th of the states.

Louisiana’s economy is weakening when it comes to the labor market and economic growth and the lack of improved public policies will continue to stifle the potential of Louisianans without reforms.

 

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