Tuesday, January 06, 2015

Bucking the trend

Remember when we used to buck the trend in the other direction?*
Nearly 40% of some 372 metro areas in the U.S. had unemployment rates below 5% in November, providing the latest sign of improving labor markets.

Twelve metros had jobless rates above 10%, while 147 had rates below 5% in November, according to data released Tuesday by the Labor Department. The data aren’t adjusted for seasonal factors.

Unemployment rates were lower than a year earlier in 341 metro areas, while 27 metros had higher unemployment rates. The eight metro areas with the largest increases in the unemployment rate were in Louisiana, led by Alexandria, where the unemployment rate in November climbed to 6.8% from 5.2% one year earlier. Of Louisiana’s eight metro areas, Alexandria was also the only one to witness a year-over-year decline in the number of employed workers.
What is happening?  You guessed it. It's the same thing that's happening in Texas (but worse.)
Now that oil prices have plunged nearly 51% from their June peak to $52.69 a barrel, some Texans sobered by memories of past energy busts are bracing for a fall. The argument among economists and business leaders isn’t whether the state will be hurt, but how badly.

Mr. Kelleher is among the Texans predicting this won’t be a replay of the 1980s oil bust and banking crisis, which drove the state unemployment rate to 9.3%. As evidence, he and others cite a more cautious banking sector, a tax and regulatory environment favorable to business, and a state economy less dependent on energy and other resources.

“Texas has become a well-rounded state,” Mr. Kelleher said. “People did remember not to overextend themselves.”

Michael Feroli, a New York-based economist at J.P. Morgan Chase & Co., is one of the skeptics of the “this-time-is-different” camp. Although the oil-and-gas industry today makes up a smaller share of Texas’ workforce than it did in the mid-1980s, it accounts for roughly the same share of its economic output, he said. So a decline in oil prices similar to the plunge of more than 50% seen in the mid-1980s, he said, could have a similar result: recession.

“Texas is, if oil prices stay where they are, going to face a more difficult economic reality,” Mr. Feroli said.
It's not "different this time." Not there, and certainly not here in Louisiana, although there are still some  people who will try to tell you that. We're in for an especially rough year of rising unemployment and little money in the state budget to help those affected.

Well, okay, some of those affected will get some help.  At least that's what their lobbyists tell us.
The new year will be pivotal for the oil and gas industry in Louisiana for reasons having nothing to do with the price of oil, Louisiana Oil and Gas Association President Don Briggs says. 2015 is an election year, and the industry must work to ensure the election of conservative, business-friendly candidates who won't stand in its way, Briggs says in a column posted on the organization's website.
Because we all know how business unfriendly Louisiana politicians have been standing in the way of oil and gas all these years. They are pesky like that.  No more, says Briggs. There will be blood. So look forward to that. 

While I was typing that I stopped to check the price of WTI crude.  $48.15 today!

*Since the beginning of the Great Recession of the late 00s, local media (especially NOLA.com) have been relentless in their promotion of the idea that Louisiana's economy had "bucked the trend."  In a sense this was correct but only because the energy boom combined with the infusion of hurricane recovery project dollars to keep the unemployment rate in check.   But the media narrative insisted instead on crediting the "Hollywood South" boondoggle and the rise of an overhyped "tech entrepreneurship" scene all of which was utter nonsense.  Oil is crashing. Unemployment is back up. The state government is broke. 

But, even as the "bucked the trend" the median income in Louisiana has remained flat since 2008. In New Orleans, though, the rent is too damn high and we're all expected to cheer.  Every get the feeling you're being conned?

1 comment:

oystersliq said...

Glad to see that WSJ article got fixed. Originally, I think they used Alexandria's unemployment rate for the entire state.