Louisiana’s Economic Snapshot – July 2011
A look at the Pelican State’s economy in relation to its neighbors
NEW ORLEANS, La. – Louisiana’s key economic figures are in many ways comparable to the surrounding states of Mississippi, Texas and Arkansas. The good news is that unemployment and foreclosures are below the national and regional average. But the challenge of facing the $1.6 billion budget shortfall for fiscal year 2012, and unfunded pension liabilities of $18.5 billion leaves Louisiana on precarious economic ground.
UNEMPLOYMENT: At 8.2 percent for May 2011, Louisiana has the second highest unemployment of neighboring states, with the next lowest being Texas at 8 percent and then Arkansas at 7.7 percent. The highest rate for the region is Mississippi at 10.4 percent, while the national average rests at 9.2%.
FORECLOSURES: Louisiana’s home foreclosure rate is the 9th lowest in the nation, with only 0.204 percent of homes foreclosed upon, with the next lowest being Mississippi with only 0.114 percent of homes foreclosed. This is far below the national average of 1.033 percent, and below the foreclosure rates for Texas and Arkansas, which are 0.936 percent and 0.513 percent respectively.
ECONOMIC GROWTH: According to the Bureau of Economic Analysis, Louisiana ranks in the fourth quintile, or second highest, category for economic growth with a 2.6 percent change in real GDP in 2010, which is equal to the national average and above the average Southeastern growth rate of 2.3 percent. The only state in the region ahead of Louisiana is Texas at 2.8 percent, while Mississippi saw its growth fall to 1.1 percent in 2010.
INCOME TAX: Louisiana’s income tax falls in the higher section of Southeastern states, with a top tier income tax rate of 6.0 percent, while Arkansas is the only state with a higher tax rate at 7.0 percent. Mississippi has a slightly lower tax rate of 5.0 percent, while Texas has no income tax.
SALES TAX: Louisiana’s sales tax is the 12th lowest in the country and the lowest of the Southeastern states at 4 percent. Arkansas’s 6.0 percent is the 35th lowest in the nation, followed by Texas at 6.25 percent and Mississippi at 7.0 percent, the second highest in the country.
BUDGET SHORTFALLS: For fiscal year 2012, Louisiana had a budget shortfall of $1.6 billion, or 19.4 percent of the general fund, which places them just behind Texas which has a $9 billion budget gap, or 20.5 percent of their general fund. Mississippi has a budget gap of 13.8 percent of the general fund, while Arkansas is one of eight states without a budget shortfall. Total, U.S. states have a budget gap of $102.9 billion, or 15.9 percent of the country’s general fund.
PENSION LIABILITIES: As of June 2009, Louisiana has unfunded pension liabilities of $18.5 billion, or 17 percent of state GDP, which was below the Southeast’s leader Mississippi, who has $15.9 billion in unfunded liabilities, or 30 percent of state GDP. Arkansas has unfunded liabilities of $6.9 billion, or 15 percent of state GDP, while Texas has unfunded liabilities equal to 12 percent of state GDP.