Mixed news on the economy

Mixed news on the economy

It’s election season, which means the candidates for Louisiana governor are telling very different stories about the state of the state’s economy. The AP’s Melinda Deslatte reviews a series of reports by the chief economist of nonpartisan Legislative Fiscal Office. The upshot: Louisiana’s economy has resumed growing after the steep drop in oil prices in 2014, but not as fast as the rest of the South or the nation.  

The economist said Louisiana’s private sector employment was 9.8% higher in June 2019 than it was in February 2010, the state’s low point from the national recession. By comparison, the private sector employment growth over the same period was 22.5% for the South and 20.1% for the nation. “Over the course of the national expansion to date, total payroll employment growth in Louisiana has been approximately 67% less than that of the national economy and 70% less than the South,” (Greg) Albrecht wrote in his analysis. That doesn’t suggest Louisiana is rocking and rolling on the economic front, but it also doesn’t mean Louisiana has fallen into the economic abyss.

The Advocate’s Kristen Mosbrucker zeroes in on construction jobs, which are expected to tick upwards thanks to a backlog of large petrochemical projects, but which have trended down recently as the state waits for new projects to start.

More than $187.9 billion in industrial construction projects have been announced in Louisiana since 2012, based on figures tracked by economist and consultant Loren Scott. Work has not yet started on $114.9 billion in projects, he said recently, giving hope to contractors and construction workers. 

 

The Problem with ‘Opportunity Zones’
Tucked into the massive 2017 federal tax cut law is a provision that creates “opportunity zones” around the country – a designation billed as a way to drive investment to poor communities. As Jesse Drucker and Eric Lipton report for The New York Times, however, instead opportunity zones have become a boon for elite investors. 

(Anthony) Scaramucci’s development in New Orleans offers a portrait of how the tax break works. His investment company, SkyBridge Capital, is using the so-called opportunity zone initiative to help build a hotel, outfitted with an opulent restaurant and a rooftop pool, in the city’s trendy Warehouse District. The tax benefit also is helping finance the construction of a 46-story, glass-wrapped apartment tower — amenities include a yoga lawn and a pool surrounded by cabanas and daybeds — in a Houston neighborhood already brimming with new projects aimed at the wealthy.

It shouldn’t be a huge surprise, as the benefits of the Tax Cut and Jobs Act have flowed largely to the richest taxpayers. Steve Wamhoff of the Institute on Taxation and Economic Policy shares some updated facts and figures: 

The richest 20 percent of taxpayers will receive $205 billion in 2020, which is 72 percent of the law’s benefits that go to U.S. taxpayers. ITEP also estimates that in 2020 another $38 billion will go to foreign investors, who benefit from TCJA’s corporate tax cuts. 

 

“Free College” still leaves students in debt
“Free college” is all the rage on the campaign trail, and there is no doubt that the spiraling cost of higher education has left millions of students with burdensome levels of debt. A new report by Sandy Baum and Michael McPherson of the Urban Institute reveals that free-tuition programs would help some more than others, and may not go far enough in helping low-income students with the greatest need: 

In particular, free-tuition programs that just fill in the gaps between tuition prices and Pell grants do not increase the funding most low-income students receive and would not decrease their borrowing. Larger shares of students from more affluent households would be affected by a free-tuition policy because few of them now enjoy this circumstance. Ensuring that low- and moderate-income students receive additional funding—beyond tuition prices—should be central to policies designed to reduce the financial barriers to college education.

 

The Unspeakable Cost of Parenthood
Raising children is expensive. And for many parents – especially single parents – it’s a cost that many are reluctant to discuss. Katherine Zoepf, writing in The New York Times, reports that 60% of parents with young children name preschool and daycare as a “very significant” or “somewhat significant” financial strain. And that’s not all. 

A 2018 online survey of 1,000 parents in the United States conducted by Credit Karma, a personal finance company, found that 67 percent of respondents had gone into debt in order to buy their children necessary items such as food, clothes and shoes. Revealingly, some 69 percent of those surveyed by Credit Karma said that they kept their child-related debt a secret, and avoided discussing it with other parents.

 

Number of the Day
18 – Louisiana’s national ranking for “worker protection policies” in a new report from Oxfam America on the best and worst states to work in America. Louisiana’s overall ranking is 42. (Source: Oxfam America)