Economic conditions - Texas ; Energy industries ; Exports ; Employment - Texas

Jason L. Saving

Mike Nicholson

English

Research Papers in Economics

RegionalUpdate
     FEDERAL RESERVE BANK OF DALLAS • MAY/JUNE 2008 SouthwestEconomy 15
The  Texas  economy  has  slowed  since 
January  but  continues  to  outperform  the 
nation.  While  signals  remain  mixed,  there 
is increased sentiment that Texas economic 
growth may remain tepid until 2009.
Payroll employment rose at a 1.3 percent 
annual rate in April, below recent trends but 
substantially better than national payroll em-
ployment growth, which turned negative in 
January (Chart 1). The manufacturing sector 
shed jobs in March and April due to sluggish 
demand and high inventories.
Texas’ performance also remains strong 
relative  to  the  U.S.  on  the  unemployment 
front. The state unemployment rate fell to 
4.1 percent in April, almost a full point be-
low the national figure.
Texas construction employment grew at 
a 3.8 percent annual rate in April after grow-
ing 2.2 percent in the first quarter. Construc-
tion contract values continued their January 
swoon, however, falling 5.5 percent in March 
and 1.2 percent in April. The decline was 
broad-based across residential, nonresiden-
tial and nonbuilding construction (Chart 2). 
Texas  existing-home  sales  remained 
strong during the initial portion of the na-
tional slowdown in 2006 but are now falling 
at about the same rate as the U.S. as a whole. 
The declines are broad-based geographical-
ly, with all major metro areas declining sub-
stantially over the past six months (Chart 3). 
Encouragingly,  inventories  decreased 
slightly in April, and Texas homes continue 
to sell more quickly than homes are selling 
nationally.  The  Office  of  Federal  Housing 
Enterprise Oversight home price index for 
Texas also bucked national trends by edg-
ing up slightly in the first quarter—a positive 
signal for the housing market.
Energy, Exports Strong
The  Texas  energy  sector  remains  the 
single most prominent source of economic 
strength. The Texas rig count continues to 
hover near 20-year highs as oil prices soar to 
new heights. In real terms, energy prices are 
the highest they have ever been.
Real Texas exports grew 3.9 percent in 
the first quarter, substantially stronger than 
in fourth quarter 2007. U.S. exports also rose 
during the first quarter but at a lower rate. 
The Texas Manufacturing Outlook Sur-
vey  suggests  that  regional  price  pressures 
are on the rise. More than two-thirds of firms 
reported higher raw material prices in May, 
and almost two-thirds foresee continued in-
creases over the next six months. This trans-
lated into a significant number of firms rais-
ing their finished-good prices. 
The Texas Leading Index has taken a 
turn  for  the  worse,  with  key  components 
negative over the past three months (Chart 4). 
While  the  leading  index’s  decline  doesn’t 
portend recession, it does reinforce the no-
tion that the Texas economy is unlikely to 
grow at a substantially faster pace over the 
near term.
—Jason L. Saving and Mike Nicholson
Chart 1 Texas Employment Growth Bests the Nation
Percent* 
U.S.
Texas
* Month-over-month, seasonally adjusted annualized rate.
SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other
adjustments by the Federal Reserve Bank of Dallas.
–8
–6
–4
–2
0
2
4
6
8
2008 2007 2006 2005 2004 2003 2002
Chart 2 Texas Contract-Value Decline Broad-Based
Millions of real dollars* 
Residential
Nonresidential
’07   ’06 ’05 ’04 ’03 ’02   ’01 ’00 ’99 ’98 ’97   ’96 ’95 ’94 ’93 ’92 ’91 ’90
Nonbuilding
SOURCES: McGraw-Hill Construction; F. W. Dodge; seasonal and other adjustments by the
Federal Reserve Bank of Dallas. 
* Five-month moving average, seasonally adjusted.
Index, January 2000 = 100*
Chart 3 Existing-Home Sales 
*Six-month moving average.
SOURCES: National Association of Realtors; Texas A&M Real Estate Center; seasonal and other 
adjustments by the Federal Reserve Bank of Dallas.
2007 2006 2005 2004 2003 2002 2001 2000
95
110
125
140
155
170
185
200
U.S.
San Antonio
Houston
Fort Worth
Dallas
Austin
Texas
Chart 4 Texas Leading Index Components (three-month change)
February–April 2008 
Percent 
0
500
1,000
1,500
2,000
2,500
3,000
2008
SOURCE:  Federal Reserve Bank of Dallas.
–1.2 –1 –.8– .6 –.4– .2 0. 2. 4. 6
Average weekly hours
Help-wanted index
Texas Stock Index
New unemployment claims
Well permits
Real oil price
U.S. leading index
Texas value of the dollar
Net change in leading index –1.11
.47
–.03
.47
.20
.07
–.66
–.59
–1.04
’08
Texas Economy Still Slowing;
Energy, Exports Are Bright Spots

Regional update : Texas economy still slowing; energy, exports are bright spots

http://dallasfed.org/assets/documents/research/swe/2008/swe0803g.pdf

Regional update : Texas economy still slowing; energy, exports are bright spots

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