Louisiana Economic Overview
Louisiana has a gross state product (GSP) of around $216 billion, ranking it 24th among U.S. states. Louisiana produces some 90 percent of the world’s crawfish, but earns higher revenues from other industries, such as oil and gas extraction. In addition, Louisiana’s natural resources and prime location have made it attractive to international investors, whose holdings in the state total almost $21 billion, the ninth largest international investment in the country.
Prior to the Civil War, Louisiana’s economy was mostly based on cotton and sugar. The destruction caused by the war and flooding, which damaged the cotton crops, crimped the economy through the end of the 19th century. Due to the addition of two other crops, rice and soybeans, and the rise of the petrochemical industry, the economy improved dramatically.
By the 20th century, the value of mineral production and fossil fuels was $27 billion, making up around 18 percent of all U.S. mineral production. When the price of oil dropped from $37 a barrel in 1981 to only $15 a barrel in 1986, the labor force was slashed from 100,000 workers in the industry to 55,000.
Due to fluctuations in the dollar, the chemical industry had its ups and downs as well. Louisiana opened a land-based casino and some riverboat casinos as a way to provide around 7,000 jobs. Many Louisiana businesses suffered extensive losses due to Hurricane Katrina in 2005.
There are approximately 27,000 farms in Louisiana, with agriculture contributing almost $11 billion to the state’s economy annually. Of this amount, forestry contributes the most, at $4.2 billion. Most of the trees are softwoods, and are harvested for making plywood and wood pulp. Other important crops are cotton, sugarcane, rice, soybeans, corn, sweet potatoes, and feed grains. The most valuable animal commodity is poultry, which brings in $1.7 billion. Louisiana's horse industry results in some $2.5 billion in economic activity from owners’ fees, breeding, racetracks, and related industries.
BANKING AND FINANCE
Louisiana is home to more than 160 FDIC-insured banks, with total assets of more than $48 billion. Compared to the rest of the banks in the country in 2008, Louisiana’s banks performed far better. Only 6 percent had an annual loss, unlike 24 percent of banks nationwide. The return on average assets (ROAA), a measure of bank and thrift profitability, for Louisiana banks is 0.95 percent, compared to the average ROAA of all national FDIC-insured banks of 0.35 percent. Some 39,000 workers are employed in Louisiana’s banking industry, at a combined annual payroll of more than $1.4 billion.
Louisiana has 20 telephone companies with more than 20,000 employees, servicing more than 2.1 million access lines. Around 9 percent get service from independent, home-owned telephone companies. More than 17,000 workers are employed by the telephone companies, with an annual payroll of more than $684 million. With some 26 newspapers, 21 television stations, and 39 radio stations, the industry provides jobs for more than 8,000 workers at a combined annual payroll of more than $250 million.
During the worldwide recession of 2008–2009, Louisiana lost the smallest percentage of construction jobs in the country, while Nevada was the only state to actually have an increase in construction jobs. Currently, there are some 138,500 construction workers employed in the sector in about 9,000 firms, but another approximately 80,000 jobs are maintained by direct and indirect expenses associated with the state’s nonresidential construction spending. In addition, nonresidential construction spending totaled around $9.4 billion, resulting in a total of $20 billion to the GSP. The average annual pay of a construction worker in Louisiana is approximately $45,300.
Some 650,000 children are enrolled in the public schools of Louisiana and are served by more than 100,000 district and school employees. Louisiana is home to 85 degree-granting institutions, with Louisiana State University (LSU) the center of the state university system.
There are currently 21,000 undergraduate students and 4,000 graduate students enrolled at LSU, which is noted for its extensive research facilities. The student government of LSU controls $5.5 million of student and state funding annually. Loyola University New Orleans is a Jesuit university with around 5,000 students and an endowment of $326 million.
Out of the approximately 43,600 million kilowatts generated in Louisiana, the largest amount (17,078 kW) is generated by nuclear power. Gas, at 13,885 million kW, generates the next largest amount of electricity, followed by coal (8,540 million kW), lignite (2,196 million kW), and oil (1,920 million kW). Louisiana was chosen for the first nuclear module manufacturing facility in the U.S., and in addition, Louisiana State University AgCenter's Audubon Sugar Institute is working on producing ethanol from sugarcane.
The state of Louisiana offers a tax incentive package for film production, including a fully transferable tax credit of 30 percent on in-state expenses and an additional 5 percent for the payroll of Louisiana residents. Since the first tax credits were introduced in 2002, the incentives generated more than $2 billion in new revenue and have resulted in thousands of high-wage jobs. Production revenues from film, television, commercials, and music videos shot in Louisiana total in excess of $37 million.
Louisiana homeowners’ insurance premium volume in 2005 was $1.01 billion, but the losses from hurricanes Katrina and Rita were $12.7 billion, wiping out 25 years’ worth of industry profits. The two hurricanes resulted in approximately two million claims, with Katrina being the most costly hurricane in U.S. history, and Louisiana accounting for 62 percent of the insured losses paid out.
Louisiana is the second largest producer of petrochemicals among the states. The total annual value of its petrochemicals industry is more than $19.6 million, which provides work for more than 23,000 employees. Synthetic rubber was first developed and produced commercially in Louisiana, as were other petroleum-based products. Louisiana’s diverse manufacturing industry yields electrical equipment and pharmaceuticals and assembles light trucks, yachts, mobile homes, and playground equipment. The total value of annual manufacturing in the state is some $173 billion.
MINING AND EXTRACTION
Louisiana is the second largest refiner of petroleum in the U.S. after Texas, and had the world’s first offshore drilling site. The petroleum and gas industry has a strong influence on Louisiana’s economy. More than 10,000 workers are employed by the industry, while the gas and production industry employs more than 41,000. More than 16 billion gallons of gasoline are produced annually, and more than $5.4 billion revenue is paid to the federal government from oil and gas leases in the Louisiana outer continental shelf. In addition, Louisiana is the largest producer of salt in the country, mining more than 3 million tons of lignite.
The nonprofit sector is an important part of Louisiana’s economy. It features some 3,200 nonprofit organizations, which spend around $8 billion annually. Individual donations, at almost 20 percent, make up the largest amount of funding, with earned income (from services provided or products sold) and state government funding coming in second and third, respectively. Nonprofits with more than $4 million annual budget report that over 40 percent of their funding comes from government sources.
Due to the devastation wrought by hurricanes Katrina and Rita, 2,270 stores closed. Although the state was able to replace all but 39,000 of the 176,000 jobs that were lost right after the storms, the retail sector was hit hard and continues to struggle. The state's biggest retailer is Walmart, which currently has 78 of its "supercenters" and five discount stores operating in Louisiana, employing more than 36,000 workers. Walmart collects more than $510 million in state sales tax and pays more than $53.2 million in state and local income taxes.
Biotechnology has a significant presence in the state. Louisiana biotechnology focuses on are bioprocess, recombinant DNA, and monoclonal antibody technology. LSU scientists were the first in the world to achieve a successful birth of a calf from a quarter of a transplanted embryo. Information technology is also an important subsector. More than 350 IT companies operate in Louisiana, and the state has three technology incubators working to cultivate even more advances in IT, digital media, and cyber technology. Louisiana is expected to become a key location for U.S. cyber-security, following the opening of the $50 million Cyber Innovation Center near Barksdale.
With five deep-water ports, Louisiana handles more than 457 million tons of shipping annually, including almost half of the country’s grain exports, trading with some 190 countries around the world. The Port of South Louisiana is the largest single port in the country, ranked by tonnage, as more than 229 million tons are shipped from it annually.
In addition, Louisiana is one of only two places in the U.S. where all six of North America’s Class One railroads meet, thus offering superior capacity and choice. Freight railroad services carry more than 33 million tons of cargo annually from Louisiana. Six interstate highways connect the state’s major urban regions, and seven commercial airports, three military airports, and 45 general aviation airfields serve the state’s airborne traffic.
TRAVEL AND TOURISM
Prior to the hurricanes, tourism in the state of Louisiana accounted for around $9.9 billion annually and provided jobs for more than 260,000 people. More than 24 million tourists flocked to top tourist attractions, such as the New Orleans French Quarter, Mardi Gras, and more than 100 other festivals, as well as to enjoy Cajun cuisine and jazz. Due to negative media coverage of the affected areas, tourism fell approximately 20 percent in the aftermath of the storms, with a loss of state tax dollars of $125 million. However, the Louisiana Tourism Marketing Program has injected $28.5 million in an effort to reverse these losses.
-World Trade Press