Oil-patch industries, shipbuilding and, to a lesser extent, business services, hotels and gaming will lead Louisiana's employment growth in 2002-2003, according to a report by Louisiana State University (LSU) economists and sponsored by Hibernia National Bank (NYSE:HIB). The researchers released their findings today at the fifth annual Hibernia Economic Outlook Conference at the Hibernia Tower.
However, the researchers caution that it is difficult to determine the impact of the Sept. 11 tragedy on consumers and businesses. "It's still much too early to get an accurate reading of the impact on the national and local economies due to these events," said Loren C. Scott, one of the LSU economists who compiled the report.
"We haven't been able to go back and measure it, but we expect that the continued uncertainty about the magnitude and timeframe of the completion of a U.S. response will create an abundance of caution for consumers and businesses," Scott said.
This caution is expected to have a temporary effect on the U.S. and Louisiana economies. However, the economists point out that nothing that occurred Sept. 11 has changed the fundamental strength of the U.S. economy. Still, consumer and business spending may slow until the end of the year. This will reduce Louisiana's real gross domestic product in the second half of this year and the early part of 2002, Scott said. National forecasters have reduced U.S. economic growth for 2001 from 1.7% to 1.1% and for 2002 from an estimated 2.6% to 1.6%. Scott said this slower national growth would filter through Louisiana.
The original report had forecast 62,900 new jobs in 2002-2003 and the record employment of 2 million people in Louisiana, but Scott now doubts this prediction will hold true.
The report projects that the state's non-agricultural wage-and-salary employment-growth rate will rise from 1.1% this year to 1.4% in 2002 and 1.7% in 2003. The economists also expect oil prices to settle in at $23-$25 a barrel as a result of OPEC's new targeted pricing policy and a lack of capacity within the cartel to cheat on production quotas. Natural gas prices are projected to average $3.50 per mcf, because of increasing demand from new merchant power plants and supply limitations created by restrictive drilling rules in U.S. coastal areas and the Rockies.
LSU researchers Scott, James A. Richardson and A.M.M. Jamal compiled the 20th annual "Louisiana Economic Outlook: 2002-2003." Study results are drawn from the Louisiana Econometric Model and are based on analysis of current and historical data as well as more than 200 interviews with business leaders from a broad range of industries throughout Louisiana.
Statewide, personal income growth is projected at 4.4% in 2001 and may rise only slightly to 4.5% in both 2002 and 2003. The population growth rate is expected to remain steady at 0.6% in 2001, 2002 and 2003.
Per-capita income is forecast to be $24,156 in 2001, increasing about $1,000 each year for the next two years and reaching $25,073 in 2002 and $26,073 in 2003.
Industries highlighted in the report include these projections for 2002-2003:
-- The oil-and-gas extraction industry is expected to add 2,700 jobs in response to relatively high energy prices and drilling limitations in many areas of the United States.
-- Houma is projected to be the fastest-growing area in the state in percentage terms in 2002 and the second-fastest in 2003. The area was predicted to add 3,800 new jobs over the next two years because of solid energy prices and continued growth in the area's extraction, shipbuilding and fabricated-metals sectors.
In East Texas markets:
-- Beaumont/Port Arthur, the largest MSA in the region, is projected to have the slowest growth. The forecast was for 4,500 new jobs over the next two years - a 1.3% job growth in 2002 and a 1.5% growth in 2003. However, the area will show a 0.2% decline in employment in 2001. Beaumont/Port Arthur has 106,900 non-agricultural wage-and-salary employees and a very large petrochemical-manufacturing base.