The Louisiana economy is not performing as well as the national economy, due to continued low oil prices. But the Baton Rouge area is relatively better off than other parts of the state.
“Thank God you’re not Lafayette or Houma,” said Washington, D.C.-based economist Elliot Eisenberg, who was the keynote speaker at today’s Real Estate Trends seminar. “Remember that every day. Don’t look for oil.”
In his presentation, Eisenberg said the nation’s economy overall is sluggish, with the gross domestic product growing at a rate of 2%, but is still performing “OK.”
“We’re not going to go into a recession, and interest rates are going to rise steadily,” he said.
There are several reasons for his confidence. Low gasoline prices, low insurance rates, near record-low unemployment levels of less than 5% and slight wage growth mean Americans have more money in their pockets, which they’re plowing back into the economy. Household spending is up 3%.
“We’re going to Vegas in record numbers,” he said. “We wouldn’t be going to Vegas unless we felt confident in the economy.”
On the flip side, the nation’s huge trade deficit, lack of corporate spending and continued low oil and natural gas prices are hampering the growth of the national economy.
“So you put it together and what is the GDP doing?” Eisenberg said. “It’s going to keep slumping along at this low, 2 percent level.”
Because of the low oil prices, which Eisenberg does not expect to stabilize for at least another 18 to 24 months, Louisiana’s economy is not performing as well as the nation’s. But compared to other oil-producing states, Louisiana is not faring that badly, Eisenberg said. Oil industry jobs make up just 2% of the total labor market in Louisiana, compared to, say, 5% in North Dakota.
“You’re not as bad off as other states,” he said. “It’s going to hurt here, but it’s going to hurt less than in some other places.”
—Stephanie Riegel
