Texas economy robust Fed Rep tells Kennedale Chamber

Texas weathering downturn with diverse economy FRB spokesperson says

Emily Kerr from the Federal Reserve Bank of Dallas spoke to a crowd of about 40 at the monthly Kennedale Chamber of Commerce luncheon last weekon March 23, 2016. Despite the recent slowdown of the economy when the bottom fell out of oil/gas production, Texas? diverse economy is keeping Texas afloat, even ?robust.? {{more:[read more]}}

 

still striving …

She noted that the Texas economy remains strong because its diversity compared to years past when it was primarily known for cattle and oil. Kerr said that Texas still remains the #1 producer of oil and gas in nation. 25% of U.S. refinery capacity and 60% of U.S. petrochemical production is in Texas. So when the market goes oil and gas production takes a serious dive, Texas feels the pain. (The rig count in Texas has dropped from 900 in 2014 to just above 200). But instead in heading into a serious recession, Texas is still striving.

Kerr shared to the gathering of local business leader the latest data and projections on the Texas/DFW economy and the reasons that Texas is doing okay.

Kerr said that job growth dropped 23% in the oil/gas industry in ?15

• Job growth tanked in 2015 in the oil and gas industry dropping by at least 23% into negative territory but has shown growth this year of 2%. The free fall of oil prices has had a negative impact on construction in 2016 but primarily in the west Texas areas and in Houston.

Trade, transportation & Utilities up 20% …

• Because of the diversity in the Texas economy, other industries are doing well and keeping Texas afloat:

• Trade, Transportation and Utilities (+20%);
• Professional & Business Services (+13.5%);
• Education & Health Services (+13.5%);
• Leisure & Hospitality (+10.6%);
• Manufacturing (+7.2%); and,
• Financial Activity (+6.1%).

• Fort Worth (-3.9%) and Houston (-0.6%) are the only major metropolitan areas to show a decline in job growth with the new year while Dallas is up 2.6%. Like west Texas, Fort Worth is more susceptible to changes in drilling activity.

• In the DFW area growth industries have been in Trade/Transportation/Utilities (4.3%), Education/Health (7.7%) and Financial (11.1%).

Texas produces 10% of all U.S. goods …

• Texas produces 10% of U.S. goods. Manufacturing sector highly correlated with overall economy

• Texas accounts for 17% of U.S. exports – Gulf coast is a major exporter of oil products and petrochemicals, land-based trade on Texas-Mexico border also an important export region.

54% of Texas exports head south …

• Mexico accounts for approximately 39% of the state’s exports and together with the rest of Latin America 54% of Texas exports head south. China is buying more of Texas goods and has seen the largest growth of any overseas market since 2000 but still accounts for just 5% of the overall total. Altogether, Asia purchases 21% while the European Union and Canada each purchase 10% of Texas products.

• Major Texas exports include computer and electronics (20%) chemical (16%), oil & coal (16%), transportation equipment (10%) and machinery (9%).

Retail growth showing signs of improvement …

Kerr said that the 2 month reserve of available houses in DFW is well below national average

• The drop in retail growth seen in 2014-15 has stabilized and shown some growth in the latter part of 2015 into 2016.

• Unemployment rate is approximately 4.5% with the national average around 4.9%

• In Texas home sales remain high while housing inventory remains low ? good for home values. The DFW housing inventory at 2 months is the lowest in major metropolitan markets and considerably below the national inventory of 5 months. Good if you are a seller tough if you are buyer.

Fort Worth is national leader in home sales …

• Fort Worth is a national leader in home sales. Sale prices have continued to increase since 2011. Fort Worth area experienced a 7.3% increased at $158,845.

• Overall Texas economy is still growing just slower. Job growth expected to be about 1% this year.

• Since the 1990 the Texas annual job growth has generally exceeded the national average, even in the downturn years.