Oil is taking its toll, but the local economy will not crash and burn this time around.
Living in South Louisiana, we are not strangers to ups and downs in the oil and gas industry. It comes with the territory. There is no doubt the local economy has shifted this year; however, because of diversification, the economy has been slower to slump. I’ve spoken about the importance of economic diversity for a long time, and it’s satisfying to see decades of progress making a difference now — when it’s needed most.
More than ever, it is critical to keep our fi nger on the pulse of the economy. Not only are executives making tough business decisions in this new economic environment, but households and consumers are also making tough choices.
The goal of the Lafayette Economic Performance Index is to present an objective view of the economy, allowing business and community leaders to make informed decisions.
The June 2015 Index is 111, down 7 percent compared to June 2014. For perspective, the EPI dropped 13.5 percent, nearly twice as much, in one year during the Great Recession. Until it leveled off in the second quarter of 2014, the EPI had been on a consistent upward trajectory. The EPI began slipping at the end of 2014. Currently, the EPI has been lower than the 12-month moving average for seven consecutive months, indicating a shift in the overall economic momentum.
When looking at all 15 indicators as a whole, the second quarter of 2015 shows declines have taken root in many areas of the economy with no sign of relief in sight. When all three categories of in dicators— leading, current and lagging — move in the same direction it means that the local economy will continue on that track. The leading and lagging indicators still look sluggish and have dropped since the first quarter. Though some of the current indicators slipped in the second quarter, many are bucking the trend and performing at a high level. Monitoring how well the current indicators hold up in the second half of 2015 will be crucial.
Lafayette Parish’s non-seasonally adjusted unemployment rate in June was 6.1 percent, eighth lowest in the state. The second quarter average unemployment rate was 5.8 percent, higher than the 3.8 percent recorded in 2014. The increase in unemployment is not a surprise given the uptick in initial unemployment claims late last year that has continued into this year.
Despite the higher unemployment rate, there is good news. The length of unemployment continues to be shorter than during the same time last year. The average duration of unemployment for the second quarter in Louisiana is 13.8 weeks — shorter than the 14.1-week average in second quarter 2014. Hopefully, this signifies that those without a job still have many opportunities to secure new employment.
At the State of the Economy presentation in June, I spoke of an additional 40,000 industrial workers needed in the next two years between Beaumont and New Orleans to keep pace with demand from petrochemical and LNG growth. Lake Charles has added 1,600 manufacturing and construction jobs over the past year and boasts the lowest unemployment rate of all metropolitan areas in the state. Our oil and gas workforce has highly transferable skills, and job opportunities are close to home.
Our community has worked for decades to diversify the economy. Even if this downturn in the energy sector is long-term, Lafayette is no longer dominated by the energy sector. With thriving technology, health care, financial, transportation, entertainment and education sectors, Lafayette will remain the “Hub City” of South Louisiana.
The Stat Tracker provides raw data for each of the 15 indicators used to create the Economic Performance Index. Local indicators are very volatile from month-to-month and changes should not be taken at face value. For example, retail sales will always decrease from December to January because of the increased holiday shopping in December. The index itself, along with the data represented in the graphs, is adjusted for inflation and seasonality in order to have the data be comparable over time.