Louisiana Economy: Energy, Petrochemicals, and the Mississippi

Louisiana is a mid-sized state economy, usually ranked in the lower-middle of U.S. states by GDP — the dollar value of everything a place makes and sells in a year. The Louisiana economy is unusually concentrated in energy, petrochemicals, and trade, with a major tourism layer in New Orleans and a deep agricultural base in the north and along the river.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the Louisiana economy?

For example, recent state GDP for Louisiana has run around $290 billion, according to the Bureau of Economic Analysis. Population is roughly 4.6 million, per the U.S. Census Bureau. New Orleans, Baton Rouge, Lafayette, and Shreveport anchor four very different regional economies.

The biggest industries

Louisiana's industry mix is shaped by its location at the mouth of the Mississippi River and on top of major oil and gas reserves. The main pillars are:

• Oil and gas — Louisiana is one of the top crude oil and natural gas producing states, with a deep offshore Gulf of Mexico industry and an inland support base in Lafayette and Houma.
• Petrochemicals and refining — the corridor between New Orleans and Baton Rouge has one of the densest concentrations of chemical plants and refineries in the country.
• Ports and trade — the Port of South Louisiana, the Port of New Orleans, and the Port of Baton Rouge handle huge volumes of grain, oil, and chemicals; Louisiana ports collectively rank among the largest in the United States by tonnage.
• Tourism and hospitality — New Orleans tourism, conventions, and Mardi Gras drive a major service economy.
• Agriculture and seafood — sugarcane, soybeans, rice, cotton, and Gulf seafood (shrimp, oysters, crawfish) are all significant.
• Healthcare — Ochsner Health, based in New Orleans, is the largest non-government employer in the state.

Jobs and wages

Louisiana labor data is published by the Louisiana Workforce Commission, with national-level numbers from the Bureau of Labor Statistics. For example, the Louisiana unemployment rate has typically run a little above the national average, with Lafayette closely tied to the energy cycle.

The Louisiana minimum wage is tied to the federal floor of $7.25 per hour. Many large industrial employers along the river corridor pay well above that on their own.

Taxes in Louisiana

Louisiana has a graduated state income tax with relatively low top rates compared with neighboring states. The legislature has moved toward flatter, lower rates in recent years.

The state sales tax rate is 4.45%, but local add-ons push the combined rate above 9% in many parishes — among the highest in the country. State tax forms and rules live at the Louisiana Department of Revenue. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in Louisiana is among the lower in the country. New Orleans is the priciest metro, with Baton Rouge, Lafayette, and Shreveport all relatively affordable. The federal government tracks region-specific Consumer Price Index data through the BLS Southeast region, and HUD publishes Fair Market Rents for every parish at HUD User.

The petrochemical corridor

The 85-mile stretch between New Orleans and Baton Rouge is one of the most industrialized riverbanks in the world. Refineries, ethylene plants, ammonia producers, and dozens of specialty chemical operations sit shoulder to shoulder along the Mississippi. The corridor is a major source of high-wage industrial jobs and also the focus of long-running environmental and public-health debates.

New Orleans' service economy

New Orleans runs on visitors. Tourism, conventions, restaurants, and cultural industries dominate the local labor market. Hurricane Katrina in 2005 reshaped the city's population and economy, and the city has since rebuilt around tourism, healthcare (with a large medical district near downtown), and a small but real tech and film cluster.

The energy belt

Lafayette, Houma, and Lake Charles sit at the heart of Louisiana's onshore and offshore energy industry. Drilling activity, pipeline operations, fabrication yards, and a growing liquefied natural gas (LNG) export sector around Cameron Parish all shape the regional business cycle. When global oil prices swing, southwest Louisiana feels it first.

How does the Louisiana economy fit into the national picture?

Louisiana is one of the most trade- and energy-exposed economies in the country. A quarter of all U.S. waterborne grain exports move through Louisiana ports, and the state is one of the top oil, gas, and LNG producers and exporters. That makes the local business cycle unusually tied to global commodity prices.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the Louisiana Department of Revenue for the most current data.