Louisiana’s gross domestic product grew by 2.3% in the first quarter of 2018, marking the state’s second straight quarter of growth and signaling a potential economic turnaround after a two-year slump.
The state’s first quarter growth eclipsed the national rate of 2%, ranking Louisiana No. 14 among states, according to the U.S. Bureau of Economic Analysis in a report released today. Louisiana previously posted a 2.2% GDP increase in the fourth quarter of 2017, slightly behind the U.S. average of 2.7%.
Any increase is a positive sign for Louisiana, which posted the slowest GDP growth rate in the country last year. The state saw an annual GDP decline of 0.2% in 2017, following a 0.4% decrease the year prior, according to the BEA.
The percent change in GDP—which is the value of all goods and services produced in a defined area—in the first quarter of 2018 ranged from an uptick of 3.6% in Washington to a drop of 0.6% in North Dakota.
Local economist Loren Scott points to two reasons for the recent GDP growth in Louisiana: First, he says, the oil and gas bust is no longer dragging down the economy as it has in recent years. And second, the state is beginning to see dividends from the burgeoning petrochemical industry.
“With the chemical boom going on, plants are now starting to produce,” Scott says. “My anticipation is that GDP will continue to grow. This is good news.”
Gov. John Bel Edwards in a statement said the GDP report is “just one more positive indicator that we are headed in the right direction.” The news follows a July 2 report that Moody’s Investors Service revised the state’s rating outlook from negative to stable—after lawmakers and Gov. John Bel Edwards approved a renewal of 0.45-cent of an expiring one-cent sales tax to offset the impending state budget shortfall.
While listing the state’s recent economic accomplishments, the governor claims to have “lowered taxes on the people of our state” in his statement. Spokesman Richard Carbo says Edwards is referring to the sales tax rate dropping to 4.45% from 5%. But it was Edwards who proposed and state lawmakers who approved upping sales taxes to 5% from 4% in 2016 to avoid the fiscal cliff, meaning the rate remains higher than it was before Edwards took office.