La. posts nation’s fastest income growth. But will it last?

Published 10:26 am Thursday, March 27, 2008

BATON ROUGE (AP) — For the second straight year, Louisiana has posted the fastest personal income growth in the nation, but a prominent economist says that the post-hurricane boost will not necessarily last.

“To argue we’re the fastest-growing state is not a good headline,” said Jim Richardson, who also sits on the state’s Revenue Estimating Conference that forecasts how much money will be available to the Legislature. “It’s a one-time shot in the arm that obviously has nothing to do with our productivity or new industries coming here or things of that nature.”

In 2007, personal income for Louisiana’s 4.3 million residents grew at a 10.5 percent rate, according to research released Wednesday by the federal Bureau of Economic Analysis.

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That’s down from Louisiana’s national-best 20.6 percent growth rate in 2006. That number was unusually high because Louisiana personal income had fallen sharply following the hurricanes in 2005 (by more than $10 billion) before rebounding by $23 billion in 2006.

The U.S. as a whole experienced a 6.2 percent growth rate in 2007, down 0.5 percentage points from the prior year.

Personal income boomed in Louisiana’s mining sector (which includes oil and gas exploration) and construction industry, both of which saw 40 percent gains since 2004, nearly double the growth in any other industry.

But Richardson cautions against reading too much into the growth figures.

After posting quarterly personal income growth rates of 3 percent and 5.6 percent in the first half of 2007, Louisiana fell to 0.9 percent personal income growth rates in the third and fourth quarters, lower than the national growth rate of 1.3 percent and 1 percent in the year’s final two quarters.

Much of Louisiana’s personal income growth in 2007 resulted from Road Home awards for 2005 hurricane damage, according to the federal bureau. Those awards averaged $1,250 per person in the state. Louisiana’s personal income growth in 2006 and 2007 combined amounted to $2,935 per person.

The state’s actual personal income, not its growth rate, remains in the middle of the pack compared to all states. The 2007 jump in personal income moved the state from 40th to 31st nationally.

Louisiana’s per capita personal income of $34,756 total personal income divided by the population is nearly $4,000 below the national figure of $38,611 in 2007.

In 2006, when Louisiana roared ahead with a 20.6 percent growth in personal income, much of the effect resulted from shifting population.

“I can tell you part of the reason the per capita (income) would be higher is it’s presumed that a number of the people who left were lower-wage people,” said Kathy Albetski of the Bureau of Economic Analysis, which is part of the federal Department of Commerce.