Driving the Economy
With the nation’s economy in its current condition, I’m often asked about the state of Lafayette’s economy. There’s no denying that business has been booming in Lafayette. With record low unemployment, record high retail sales, and a steady housing market, Lafayette seems to be bucking the national trends. We have many reasons to remain optimistic about Lafayette’s economic outlook, and the numbers reflect that. Over the past year, I’ve shared with you information and statistics on a variety of topics from the oil and gas industry to tourism, health care and women-owned businesses. This month, I’ll update you on the meat and potatoes of LEDA’s statistical library — retail sales, per capita income, construction valuation and unemployment rate.
As we seek an explanation of the figures for our parish, we look past the impact of oil and gas and take notice of the correlation between the hurricanes and our economic changes. Most people in Lafayette immediately recognized the impact of hurricanes Katrina and Rita on Acadiana. This impact obviously went beyond the instant increase in traffic along our roadways; it equaled a rise in population and initiated growth in many areas of Lafayette’s economy. This growth has continued to escalate; however, as we take a closer look at post-hurricane statistics, we can see a gradual stabilization across the board. As the rebuilding process continues and the affected New Orleans and Lake Charles areas return to normal, we can expect to see a similar pattern in our community.
Aside from happenings in the oil and gas industry, one of our best indicators is retail sales. The retail sales statistic is indicative of the current condition of the market. Fluctuation is often a direct result of the loss or gain of personal or disposable income. With the unemployment rate reaching record lows in 2006 and 2007 and wage growth on an upswing, we benefit as a community. As our workforce remains saturated with employees, these workers reap financial benefits resulting in a steady, and often increasing, amount of spending. In accordance, retail sales to date are 5.21 percent higher than in 2007. If retail sales continue to increase at this rate, we can expect to see upwards of $5.5 billion dollars in sales by the end of this year. But retail figures alone cannot provide an accurate summation; we never want to rely on any single determinant.
Per capita income, partnered with the other indicators, is a significant measurement of the quality of our economy. In assessing our economic growth and progress, we look to PCI as a reliable source of our success as a community. And because of its availability nationwide, it is sometimes the only indicator available to adequately compare ours to other regions. As evidence of its importance, we’ve identified it as the most frequently requested statistic of LEDA clients. The most recent figures show that Lafayette Parish’s per capita income is $36,925, which is $4,000 more per every man, woman, and child than the year before. Lafayette Parish has the third highest PCI in the state and is now ranked in the top 9 percent of all counties in the U.S. Lafayette per capita income remains above both the state and national figures. Even though the statistic is lagging in nature — the most current figures are based on 2006 data — it gives us a picture of post-hurricane Lafayette. A picture that is bright.
The 2006-2007 fiscal year was a record year for Lafayette in terms of total construction valuation. At $494 million, the year-end total was more than $176 million higher than the previous year. With five apartment complexes permitted during that time, new commercial construction played a major role in this growth. The impact of this phenomenon extended beyond the residential and commercial developers to include many Acadiana businesses like real estate companies, engineering and architectural firms, mortgage lenders, and subcontractors — all of whom saw increases in business. The year-to-date construction valuation for the 2007-2008 fiscal year is down from last year; however, that can be expected with so many big-dollar projects during the previous year. Developers, contractors, and builders needed time to complete those projects. As they are completed, we expect to see related increases in industry-specific employment, retail sales, and other factors; however, it’s uncertain whether Lafayette will ever experience such a drastic increase in construction again. It is important to note that even with decreases in activity and a lower year-to-date figure, what we’re seeing thus far this year is still higher than year end numbers for four of the past nine years. It seems as if Lafayette may be returning to pre-hurricane days of steady, progressive change.
Unemployment rate may be one of the most talked about economic indicators, and for good reason. A low unemployment rate has its advantages — more income for workers, more spending power, and overall high morale for the population. It also reduces the number of people receiving unemployment assistance from the government and tends to indicate a growing economy. Keep in mind that unemployment can be too low, resulting in serious challenges for businesses that are looking to expand or hire new workers. Lafayette’s unemployment rate has dipped below the 3 percent mark for 21 out of the last 28 months, meaning that our workforce is experiencing almost complete employment or what labor professionals called “frictional unemployment.” Finding skilled employees is now the most urgent challenge facing employers across Acadiana, even as the nationwide rate of unemployment, now at 5.5 percent, has grown steadily and is forecasted to reach 6 percent by January of 2009. Lafayette Parish did see an increase in unemployment in June, jumping to 3.6 percent — almost a full percentage point higher than the 2.7 posted in May. State labor officials say this is a normal, seasonal trend from May to June, occurring as young people enter the workforce when school is out (they’re included in the count if actively looking for work). But we may also be seeing the beginning of a return to pre-Katrina/Rita normalcy in the Hub City. Staying on top of the current employment situation helps us implement the best strategies for continually attracting great companies to Lafayette — along with retaining existing great companies — and for making sure that our available workforce is ready to step into new jobs as they appear.
At LEDA we are constantly evaluating the economy, reviewing statistics as they are received at various points in the year. Recently we’ve taken these stats and coupled them with anecdotal information and other research to assemble an advanced market study. The assembly of concepts supported by statistical information is really the best way to assess the state of Lafayette’s economy. As the months go by we hope to further educate Acadiana Business’ readers on what makes Lafayette tick. And as our market continues to evolve, we’ll keep bringing to the forefront those figures to make it all make sense. We rely heavily on input from community and business leaders to understand the complete picture, so please take the opportunity to educate us on how to gauge success in your industries. And please let us know if there are stats out there that fill in the missing pieces and help complete the puzzle that is Lafayette’s economy. For access to statistics that the LEDA staff maintains, please visit our Web site at www.lafayette.org.
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Gregg Gothreaux is president and chief executive officer of the Lafayette Economic Development Authority._