Tuesday, May 28, 2024

Federal data says Louisiana’s economy declined during first quarter, worse than all but five states

by BIZ Magazine

By Victor Skinner | The Center Square contributor

 Louisiana’s economy slumped during the first quarter of 2022, with the state’s gross domestic product annual rate decline of 4.3% outpacing all but five states, according to the latest data from the U.S. Bureau of Economic Analysis.

Louisiana was among 46 states and the District of Columbia that witnessed a decrease in real gross domestic product during the first quarter of 2022, coming in 45th out of 50 nationwide. Louisiana’s 4.3% annualized contraction was the second biggest in the southeast, behind only West Virginia’s 6.1% decline.

Nondurable goods manufacturing was the leading contributor to Louisiana’s slowdown with a 2.29% reduction, followed by a 0.96% drop in mining, quarrying and oil and gas extraction.

Other Louisiana industries with a decline included retail trade, transportation and warehousing, finance and insurance, wholesale trade, construction, accommodation and food services and administrative and support and waste management and remediation services, according to BEA figures released Thursday.

“It’s probably hard to imagine a report that’s worse right now,” Gary Wagner, economist at the University of Louisiana at Lafayette, told NOLA. “I think there’s a 50-50 chance we’re in a recession.”

Louisiana’s 4.3% real GDP drop was nearly double neighboring Texas’ 2.3% decline, while Arkansas posted a 0.9% decrease and Mississippi declined 1.3%.

Nationwide, “real gross domestic product decreased in 46 states and the District of Columbia in the first quarter of 2022, as real GDP for the nation decreased at an annual rate of 1.6%,” the BEA reports. “The percent change in real GDP in the first quarter ranged from 1.2% in New Hampshire to -9.7% in Wyoming.”

The BEA contends the coronavirus continued to impact the economy through April, though the extent of its influence “cannot be quantified.”

“In the first quarter, an increase in COVID-19 cases related to the Omicron variant resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country. Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased as provisions of several federal programs expired or tapered off,” according to the report.

“The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP by state estimates for the first quarter, because the impacts are generally embedded in source data and cannot be separately identified.”

The slumping GDP in Louisiana and nationwide follows a 6.9% expansion in the last quarter of 2021 and was the first drop in GDP since the second quarter of 2020, as the country struggled with a recession brought on by the pandemic.

Economists generally consider the economy in a recession following two consecutive quarters of contractions and the Federal Reserve Bank of Atlanta’s GDPNow, a key real-time model tracking U.S. economic activity, is predicting the second quarter of 2022 will also be in the red.

The model on Thursday showed the U.S. GDP contracted by 1% from April through June.

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