After two years of extensive research and development, the Economic Performance Index was unveiled a

After two years of extensive research and development, the Economic Performance Index was unveiled at ABiz's first-ever corporate travel State of the Economy luncheon in May. Feedback from the event was overwhelmingly positive because people in the community finally had an easy-to-understand and simple response corporate travel to the question, "How's the local economy?" As you'll read on the following pages, the second quarter response to that question hasn't changed much since May. The local economy is strong and on the upswing. Second Quarter 2012 The Lafayette Economic Performance Index tracks the pulse of the local economy. Like any index, its function combines multiple data points and creates a single score that can be compared over time. This particular index tracks fifteen individual local statistics, but together they work to tell a unified corporate travel story about how the Lafayette economy is performing. The Index is the most accurate reflection of the economy, because it's seasonally and inflation adjusted, meaning movement in the index is based on actual changes in the economy. In June, the Index totaled 119.16 — the highest the Index has been since August corporate travel 2008. Looking at Figure 1, the Index has taken off since the beginning of the year. At the May State of the Economy Luncheon, I said that 2011 was the "best year ever," and judging by the Index, 2012 could be the new benchmark year. The Index has been above the 12-month moving average for 16 of the past 17 months. This is significant because if the Index is consistently above or below this average, it is a signal that the economy is headed in one direction or the other. When the Index is steadily above the 12-month moving average, as it is now, it signals an upward turn in the economy. Figure 1 shows the Lafayette economy has been progressively increasing over the past three years, with the only setback coming after the BP oil spill and subsequent drilling moratorium. The Index has taken off this year, increasing 6.5% since December. This supports IHS Global's study, released in July, that ranked Lafayette as one of the "fastest growing corporate travel metros" in the nation; projecting Lafayette to have the highest growth in employment, 8.8%, and the second highest gross metropolitan product growth, 7.5%, of 363 metro areas. Drilling down into the 15 economic indicators that make up the index shows strong growth in the local economy. The leading, current and lagging indicators as a whole are all performing well. All three types of indicators moving corporate travel in the same direction is encouraging because it means the local economy corporate travel is on track for continued growth and prosperity. All of the six leading corporate travel indicators are performing better than during the second quarter of 2011. The Louisiana average manufacturing weekly hours worked has dramatically increased in 2012. In the first six months of last year, the average hours worked was 40.8 compared to 43.4 hours this year. This increase indicates a rise in demand for production, and if sustained, businesses corporate travel will need to hire more workers to accommodate the higher demand. Another high point among the leading indicators is the average number of weekly Unemployment Insurance claims in Lafayette Parish. In June, weekly claims dipped to a pre-national corporate travel recession low of less than 100. Weekly claims are continuing a three-year trend of improvement, which most economists believe is the mark of real job growth in an economy. The Lafayette Stock Index is currently at 222.9 and has increased nearly every month since the third quarter setback in August 2011. The decrease, which was triggered by Standard Poor's downgrade of the U.S.'s credit rating, was only temporary as the index has increased 22% since September 2011. Of the eight locals stocks tracked in the Lafayette Stock Index, PHI Inc., Teche Federal Bank and Home Bank have fared the best, increasing 28%, 17% and 16%, respectively, since June of last year. Residential building permits in Lafayette city limits and in the unincorporated areas of Lafayette Parish have performed moderately for more than a year. The fair performance of residential building permits corporate travel is not surprising given how slow the national housing market is recovering. Although this is traditionally a leading indicator, it is the last indicator to align itself with the other well-performing indicators. It is important to note that much of the residential growth corporate travel in the parish has come from construction in neighboring municipalities and are not reflected in the number reported here. The final leading indicator LEDA track is drilling permits. As of June, the Bureau of Safety and Environmental Enforcement has approved 104 drilling permits in the Gulf of Mexico — far more than the 43 permits issued during the same time period in 2011. Drilling permits for Louisiana onshore and in-state waters has also been on an upswing since late last year. In fact, Louisiana drilling permits have been above the 12-month moving average for the past two quarters, signaling a sustained corporate travel improvement. Current indicators continue to show the depth and vigor of the economic upturn going into the third quarter. Among the strongest indicators is non-farm employment in the Lafayette MSA — Lafayette and St. Martin parishes. Since last June, the local workforce has added 15,300 jobs; and this growth has not gone unnoticed. Forbes ranked Lafayette as the best mid-sized city for jobs and fourth among all cities, corporate travel citing short, mid and long-term corporate travel job growth and the region's momentum as factors. Area businesses have been consistently adding jobs since the beginning of 2010, even as other areas of the country struggled to hold on to jobs. As long as the leading indicators continue to improve, look for the local businesses to keep adding jobs. Retail sales, much like non-farm employment, are a top economic indicator. With sales of more than $500 million in June, 2012 year-to-date sales have reached $2.8 billion, an increase corporate travel of 10.1% over 2011. June sales reflect an increase of 11.9% over last June. As with retail sales, 2012 hotel/motel corporate travel receipts corporate travel continue to outperform 2011 totals. June hotel/motel receipts totaled $6.7 million, placing the year-to-date total 14.6% higher than 2011. Both retail sales and hotel/motel receipts have consistently been above the 12-month moving average signaling their continued strength. In fact, total retail sales are predicted to approach the $6 billion mark this year and beat the all-time high of $5.4 billion set in 2008. Other current indicators such Lafayette Regional Airport enplanements and average home sales price are also showing positive momentum. Enplanements at LFT are up this year; and the airport posted corporate travel the largest number of travelers in a single month, 22,548 passengers, in May. This is good news for the airport, which is planning a passenger terminal expansion that would increase the flight capacity at LFT. Finally, strong performance among indicators have bolstered the average sales price for a single family home in 2012. In addition to stronger home prices, nearly a third of the houses listed on the Multiple Listing Service were under contract corporate travel in July, signaling buyers' confidence and a strong market. Over the past year, most of the lagging indicators have aligned with the positive performance of the leading corporate travel and current indicators. One of the last indicators to recover from Lafayette's version of the recession was the unemployment rate. After seeing steady declines for a year, the Lafayette Parish unemployment rate has been the lowest in the state for all of the second quarter. The Lafayette Parish seasonally adjusted unemployment rate in June was 5.2%, much lower than both state and national rates. Considering 4% is thought of as the natural unemployment rate that signals a healthy economy, Lafayette is in a great place right now. Not only are there fewer people jobless in Lafayette, but the length of unemployment is also shorter. In June, the average duration of unemployment in Louisiana was 13.9 weeks, the shortest in the past three years. In addition to positive employment indicators, the number of bankruptcies in the Western District of Louisiana has also continued to improve. Total bankruptcies through June are down 8.6% from this time last year and have followed a downward trend since late 2009. The only lagging indicator that has not improved is the Louisiana rig count. There were 118 rigs on and offshore this July compared to 172 in July 2011. Many people may not realize that the decline in Louisiana rig counts is the result of lower counts in the Haynesville Shale in North Louisiana. We have seen the rig count in North Louisiana drop from 93 in July 2011 to only 25 in July of this year. Only the initial decrease in the summer and fall of 2010 can be attributed to the BP Oil Spill and subsequent drilling moratorium; the balance of the decrease is the result of falling natural gas prices. With gas plays like the Haynesville Shale, Eagle Ford near San Antonio and the Bakken in North Dakota producing and enhanced recovery techniques, the resulting increase in the natural gas supply was not met with an even amount of demand and the price of natural gas dropped to nearly $2/MMBtu — making even the most economical shale plays hard to turn a profit on their dry gas fields. Production companies are taking it upon themselves to cut back in the fields yielding the least returns. Experts predict a leveling-off of the rig count in North Louisiana and production stabilizing over the next few years as natural gas prices slowly climb back to the $4 to $5/MMBtu range. In contrast to North Louisiana, the offshore rig count has steadily climbed to 48 rigs in July from a low of 14 immediately following the BP Oil Spill. Though offshore and North Louisiana rig counts are giving corporate travel off mixed signals, it is encouraging to hear companies like Hornbeck Offshore Services announce their plans to bring drilling vessels that were moved following the oil spill and moratorium back to