In 2017, Louisiana’s gross domestic product (GDP) was one of the least impressive of the 50 states.
For observers in Southwest Louisiana, such news could lead to confusion.
Last week, the Associated Press published a story stating, “The state’s economy contracted by 0.2 percent, getting smaller for the second straight year. Louisiana was hammered by poor economic results in the nondurable goods manufacturing sector, which includes key oil-refining and chemical industries. The Bayou State’s economy also shrank in 2016, contracting 0.4 percent.”
Upon reviewing notes like that I immediately started thinking of the lyrics from Marvin Gaye’s song “What’s Going On?”
At the moment, basic economic definitions are needed.
Let’s define GDP.
According to www.investopedia.com “Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well (in the United States, for example, the government releases an annualized GDP estimate for each quarter and also for an entire year). GDP includes all private and public consumption, government outlays, investments, private inventories, paid-in construction costs and the foreign balance of trade (exportsare added, imports are subtracted). Put simply, GDP is a broad measurement of a nation’s overall economic activity – the godfather of the indicator world.”
According to the Associated Press story, oil price fluctuations going back to 2010 may be a contributing factor to the shrinking GDP.
So how are residents, business owners and governmental officials in Southwest Louisiana supposed to react to such news?
Understand that the GDP figures published are a total of all the state’s economic regions and that our region, even though not singularly represented in those numbers, is special.
Remember, that the United States Commerce Department’s Bureau of Economic Analysis announced in September 2017 that from 2015 to 2016, the Lake Charles area’s GDP increased 8.1 percent, which was the most significant improvement in the nation.
What factors contributed to the growth?
The local chemical industries increase in output and expansion which continues to be predicated on access to low cost natural gas.
Several weeks ago, Stephen Waguespack, President and CEO of the Louisiana Association of Business and Industry acknowledged the state’s overall economy is not doing well, but southwest Louisiana was head and shoulders in contrast to the rest of the state due to billions in current and announced industrial development projects.
He said southwest Louisiana, “is keeping the rest of the state pulled up by its bootstraps.”
Site Selection magazine published an article in March spotlighting the region and its “business climate that is already a national leader.”
The magazine quoted Dr. Loren Scott who described southwest Louisiana’s economy with the following statement.
“Performance of the Lake Charles economy over the past four years reminds the author of that great race in the 1973 Belmont Stakes won by Secretariat by 31 lengths. Like Secretariat, Lake Charles is far out in front of all the other MSAs in the state and is one of – if not – the fastest-growing MSAs in the nation.”
Our job right now is to remember those facts regarding southwest Louisiana.
Regardless of what is happening on others parts of the state, this region is outperforming in many economic indicators.
What we need to do is develop razor sharp focus on educating both young and older for new jobs and business opportunities, find ways to work with state and federal officials to improve our infrastructure, and lead the way in diversifying our local economy.
A friend of mine, who happens to possess one of America’s most astute economic minds, told me this when I asked him what’s going on after reading the GDP story.
“Southwest Louisiana is on the cusp of something new, while a lot of our state is trying to preserve the old,” he said.
Remember that statement when you read or hear negative stories and opinions.
Southwest Louisiana is thriving and that is what’s going on.