Unless you have been living in a cave, you know about the massive, still uncontained, oil mess in the Gulf of Mexico. This thing is going to have some major economic consequences worldwide. The most immediate and acute impact will be in the Gulf Coast counties of Louisiana, Mississippi, Alabama, and Florida. What will these consequences be? Will those counties’ economies immediately go down the tubes? Or will the clean-up money BP injects into the local economy actually give a boost, at least for awhile? Inquiring minds want to know.
At this point we obviously cannot tell you what will happen with the economies of the affected area – we’re clever, but not that clever – but we can tell you what has happened in the past, and then we can follow it over the coming months to see what the future holds.
How do we measure the economic impact? We will start off by looking at total wages paid in the counties, indexed with January 2006 as the baseline. Why total wages? Because total wages are the single best indicator of economic health of an area because they represent the total money being injected into the local economy. Sure, a chunk of wages goes into income and other taxes. And money is not always spent in the same location where it is earned. But we are looking at wages at a county level, and most people live and work in the same county.
If you are not familiar with indexing, you might wonder why we index total wages rather than just give the real numbers. Indexing allows us to compare the relative change in counties that have significant differences in absolute numbers.
While we could provide this information for each Gulf Coast county individually, for now we will aggregate by state to avoid burying readers in too much data.
With that introduction, here is the data:
What we see is that, as of April (before any impact of the spill would register), the Gulf Coast county economies seemed to be on the mend. The Louisiana and Mississippi counties improved dramatically since 2006 mainly because they were recovering from Hurricane Katrina. Florida’s economy was headed south even before the subprime mortgage fiasco hit. The Alabama counties were doing OK until early 2009, when they followed much of the rest of the country into the Great Recession, ending up in April 2010 only slightly ahead of where they had been at the beginning of 2006. But starting in late 2009 or early 2010, the Gulf Coast counties in all four states seemed to be on the upswing.
Check back over the coming months as we follow these counties. We will track extend the graph above, and we will look at the data in other ways, such as looking at the fishing industry in particular. And if you have suggestions, please let us know.
In case you ware wondering which counties we are including, here is the list.
Bay, Broward, Charlotte, Citrus, Collier, Dixie, Escambia, Franklin, Gulf, Hernando, Hillsborough, Jefferson, Lee, Levy, Manatee, Miami-Dade, Monroe, Okaloosa, Palm Beach, Pasco, Pinellas, Santa Rosa, Sarasota, Taylor, Wakulla, Walton
Cameron, Iberia, Jefferson, Lafourche, Orleans, Plaquemines, St. Bernard, St. Mary, St. Tammany, Terrebonne, Vermilion
Hancock, Harrison, Jackson