An old saying once used to suggest something is not relevant is a bit ironic today: What’s that got to do with the price of tea in China?
Unfortunately, the price of a lot of things in China is more than relevant to Louisiana’s generally positive but a little bit more uncertain economic prospects.
The price of stocks in China after a market tumble, as well as Greece’s status in the EU, apparently have had an impact on United States consumer confidence, or at least economists at the Conference Board think so.
The consumer confidence survey is the lowest since September, but economist Lynn Franco told The Associated Press that it’s still a positive number: “Overall, the index remains at levels associated with an expanding economy and a relatively confident consumer.”
The U.S. economy grew by a solid 2.3 percent in the second quarter, the Commerce Department reported. So economic output numbers and orders of durable goods continue to be positive but also with a level of uncertainty. The latter were boosted by big airplane sales by Boeing after the Paris air show but not necessarily other products; the strong dollar inhibits foreign sales by making U.S. products relatively more expensive.
One of the durable-goods numbers is relevant to Louisiana — oil and gas drilling equipment. That market has been severely curtailed by the fall in the price of oil.
And here’s another price-of-tea-in-China effect: A slowdown in that giant economy in Asia is one of the factors in the fall of oil prices.
While in the United States much attention has been focused on expanded domestic production — a long-term good for the economy and for Louisiana’s service oilfield industries — a world market is also highly sensitive to energy demand, and China and European countries have not been growing as in the past.
Louisiana’s energy sector thus does not show quite the countercyclical growth that we have been used to. With energy demands growing, even in past national recessions, we could count on energy for Louisiana growth even when the rest of the nation was undergoing harder economic times.
Now, our economic fortunes are more heavily dependent on others’ growing. That was particularly apparent during the nation’s heavy recession that began in 2008; closure of timber yards and lumber mills, for example, hurt the state significantly north of Interstate 10. Louisiana’s exports, from food and fiber to petrochemical products, are today more than ever integrated into world markets.
The price of tea in China? Our answer to the question these days might be along the lines of, “Well? What is it?”