Quarterly report published by Tarleton State University discussing the economic conditions across the United States, the state of Texas, and Erath County, Texas.  Data is compiled from statistics and information available from government agencies with summaries and some commentary

Beaty, William L.

Tarleton State University. College of Business Administration.

Portal to Texas History

Cross Timbers Business Report 
Published by the College of Business Administration, Tarleton State University 
Articles by Members of Delta Mu Delta, William L. Beaty, Editor 
                                                                                                                                                                                
Volume 18, No.1                                                                                                        Fall 2004   
 
Third Quarter Growth Rate Disappoints Some Observers 
By Adelaide Odoteye 
 
 The U.S. economy grew in the third quarter, but at a 
rate considerably less than many analysts predicted.  Gross 
domestic product (GDP), a measure of all the goods and 
services produced in the U.S., increased at an annual rate of 
3.7 percent during the period from July to September 2004.  
This growth exceeded the 3.3 percent rate posted in the sec-
ond quarter, but was still significantly below the 4.3 percent 
that some economists predicted.  The rate of growth last 
quarter was also below the 4.4 annual percentage increase 
reported for the first quarter of this year, and the 7.2 percent 
increase experienced during the same period last year.  Part 
of the reason for the slower rate of growth is that advances 
in consumer spending were offset by reduced inventory-
building and lower net exports.  
 GDP is primarily influenced by consumer spending, 
business investment, government spending and net exports.  
For the third quarter, economists had alluded to evidence 
of rebounding consumer spending and a spurt in business 
spending as reasons to expect a larger growth rate.  Con-
sumer spending, which comprises two-thirds of total eco-
nomic activity, did in fact increase by 4.6 percent, follow-
ing a 1.6 percent gain in the previous quarter.  Purchases 
of durable goods, such as cars and appliances that are in-
tended to last three years or more, grew at a phenomenal 
16.8 percent rate, a significant contrast from the 
0.3 percent decline recorded in the second quarter.  Spend-
ing on nondurable goods, such as clothing and food, rose 
by 3.9 percent – up from 0.1 percent in the previous pe-
riod. 
 Business investment posted a solid increase of 
8.5 percent, but this gain represented an overall decline 
from the 13.9 percent growth rate in the previous quarter.  
Federal government spending increased 4.6 percent, while 
spending by state and local governments fell by 
0.5 percent. The economy realized a decrease in net ex-
ports of 2.6 percent, caused by exports increasing by only 
5.1 percent, while imports advanced by 7.7 percent.  The 
effect of imports on GDP was to reduce growth by 1.13 
percentage points. 
 The third quarter readings, while below expectations, 
are encouraging nonetheless.  As Richard Yamarone, an 
economist with the Argus Research Corp noted in a Wall 
Street Journal article, “The economy right now is running 
in the middle lane.  We’re not in the fast lane, but we’re 
not on the shoulder or in the break-down lane.” 
Adelaide Odoteye is a senior majoring in accounting at 
Tarleton State University 
 
 
Labor Market Improvement Denoted By Employment Statistics 
By Sukaina Jafri 
 
 The Bureau of Labor Statistics recently reported that 
the national unemployment rate held steady at 5.4 percent 
from August to September.  This stagnant pattern came 
despite an increase of 59,000 jobs over this period. 
 The August-September pattern marks a slight im-
provement when compared to July, when the national un-
employment rate was at 5.5 percent.  This year’s labor mar-
ket data indicate the lowest jobless rates since October 
2001.  The latest figures may indicate the economy is 
making its way out of a soft spot. Following its September 
21 meeting, the Federal Open Market Committee noted 
that, “after moderating earlier this year, partly in response 
to the substantial rise in energy prices, output growth ap-
pears to have regained some traction, and labor market 
conditions have improved modestly.”  
Changes in Real GDP
Annual Percentage Rates
Source:  Bureau of Economic Analysis, U. S. Department of Commerce
2.6
0.7
1.9
4
7.2
4.1 4.4
3.3
3.7
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2002 2003 2004
0
2
4
6
8
 The Texas unemployment rate fell from 5.7 percent in 
August to 5.5 percent in September.  This is 1.1 percent 
lower than the jobless statistic noted the year before, al-
though it remains slightly higher than the national average. 
 In the Cross Timbers area, all five counties experi-
enced stable or improved unemployment rates when com-
pared to last year, and all counties reported rates below the 
national and state averages.   
 Bosque County’s unemployment rate decreased from 
5.6 percent in July to 5.0 percent in August to 4.4 percent in 
September.  The 5.1 percent average rate for the first nine 
months of 2004 is 1.3 percent below the 6.4 percent mean 
reported in 2003. 
 Comanche County also enjoyed a decrease in its un-
employment rate – from 3.8 percent in July to 3.3 percent 
in August to 2.8 percent in September.  The 3.7 percent 
average rate for the first nine months of 2004 equals the 
mean reported last year. 
 Eastland County’s unemployment rate decreased from 
3.5 percent in July to 3.2 percent in August to 2.8 in Sep-
tember.  The 3.6 percent average rate for the first nine 
months of 2004 is 0.5 percent less than the 4.1 percent 
mean reported the previous year. 
 Erath County’s jobless figure decreased from 2.6 per-
cent in July to 2.4 percent in August to 2.2 percent in Sep-
tember.  The 2.5 percent average rate for the first nine 
months of 2004 is significantly less than the 3.0 percent 
mean reported the previous year. 
 In Hamilton County, the unemployment rate de-
creased from 2.9 percent in July to 2.7 percent in August 
to 2.4 percent in September.  The 2.9 percent average rate 
for the first nine months of 2004 is 0.5 percent less than 
the average reported in 2003. 
 The Bureau of Labor Statistics and the Texas Work-
force Commission collect and report labor market data on 
a monthly basis.  National and state figures are adjusted 
for normal seasonal variation, while local statistics remain 
unadjusted.  
Sukaina Jafri is a senior economics major at Tarleton 
State University. 
 
Rise in Consumer Prices Brought on By Higher Lodging Rates 
By Rachel O’Dell 
 
 The consumer price index (CPI) is a statistic developed 
by the Bureau of Labor Statistics to measure changes in the 
cost of basic goods and services.   Over the third quarter of 
2004, this indicator rose at an annual average rate of only 
0.6 percent.  This increase compares favorably to the 4.7 
percent average inflation rate reported the previous quarter. 
 The CPI decreased at an annual rate of 0.6 percent in 
July and advanced at rates of 0.6 and 1.9 percent in August 
and September. The increase in September’s inflation rate 
was brought on by an increase in lodging rates, medical 
care prices, and transportation costs.  According to the Wall 
Street Journal, the jump in lodging rates may have been 
aggravated by the sharp increase in demand for hotel and 
motel rooms brought about by hurricane-related evacuations 
in Florida. Energy prices declined for the third month in a 
row in September. 
 The core index, which excludes volatile food and en-
ergy items, rose at annual rates of 1.2 percent in August and 
3.6 percent in September.   
 
 
 The Bureau of Labor Statistics collects and releases 
CPI data on a monthly basis.  
Rachel O’Dell is a senior business management 
major at Tarleton State University. 
UNEMPLOYMENT RATES
Source:  U.S. Bureau of Labor Statistics and Texas Workforce Commission
'
'
' ' '
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'
'
' ' ' '
' ' '
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& & & &
& & & & & & & & &
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Jul Sep Nov Jan Mar May Jul Sep
2003 2004
0
1
2
3
4
5
6
7
8
Percent
U.S. 
Texas
Erath Co.
INFLATION RATES
(Annual Changes in Consumer Prices)
Source:  Bureau of Labor Statistics
2
3.9
3.3
0
-2.6
2
5.8
3.2
5.8
2.6
7.7
3.8
-0.6
0.6
1.9
Jul Sep Nov Jan Mar May Jul Sep
2003 2004
0
2
4
6
8
-2
-4
Percent
The College of Business Administration at Tarleton State University presents the Cross Timbers Business Report 
http://www.tarleton.edu/~econ/ctbr.htm as a service to local residents.  It is written by the members of Delta Mu Delta, a 
business honor society.  This report is distributed without charge to any interested person or organization.  To subscribe 
to this publication or make suggestions regarding its content, write William L. Beaty, Editor, P.O. Box T-920, Tarleton 
Station, TX 76402, phone 254-968-9622, or E-mail beaty@tarleton.edu. 
 
Most Cross Timbers Counties Post Income Gains 
By Laurien C. McCaw 
 
 The Bureau of Economic Analysis recently reported on 
per capita personal income for all counties within the 
United States.  Evidence from the report shows that with the 
exception of a slight decrease in Eastland County, all the 
counties within the Cross Timbers area experienced income 
growth in 2002. 
 Bosque County posted a 2.4 percent income growth 
from 2001 to 2002, which brought them to a per capita per-
sonal income level of $22,902.  As a result of this in-
crease, Bosque rose from a ranking of 131st in 2001 to 
122nd in 2002 out of 254 counties in Texas. 
 Comanche County reported an increase of 5.0 percent 
between 2001 and 2002, which was the highest growth 
rate of all five counties of the Cross Timbers area.  The 
increase from $22,892 to 24,036 caused Comanche to im-
prove its Texas ranking from 100th to 92nd. 
 Eastland experienced a slight decrease in per capita 
personal income – from $22,873 in 2001 to $22,528 in 
2002.  Despite this drop off, Eastland County’s ranking 
increased from 114th to 104th. 
  Erath County displayed a per capita personal income 
of $24,431 in 2002.  This figure represents a growth of 2.8 
percent over the previous year.  Erath rose from a ranking 
of 96th to 81st between 2001 and 2002. 
 Hamilton experienced the second highest growth rate 
(4.1 percent) between 2001 and 2002.  The county’s per 
capita personal income ranking rose from 98th to 79th over 
this period. 
 The Bureau of Economic Analysis, which is affiliated 
with the U.S. Department of Commerce releases county 
per-capita income data on an annual basis. 
Laurien McCaw is a senior majoring in economics at Tar-
leton State University. 
 
Retail Sales Hold Strong 
By Zeb Pomerenke 
 
 According to retail sales figures released by the State 
Comptroller’s Office for the first quarter 2004, the Cross 
Timbers counties as a whole experienced overall growth of 
10.4 percent, with an aggregate sales increase of $19.3 mil-
lion over first quarter 2003. Four of the five counties com-
prising the Cross Timbers experienced an increase in gross 
retail sales in the first quarter of this year over the January-
March 2003 value.  
 Bosque County’s $24 million in sales for the quarter 
gave it the largest percentage increase in the Cross Timbers 
area, with an advance of 48 percent over the 2003 value and 
a 60 percent increase over 2002’s aggregate.  
 Erath County increased its sales total to $93.6 million 
in the first quarter of 2004. This figure represents increases 
of 12 percent over 2003 and 9.7 percent over 2002. 
 Hamilton County’s retail sales total of $13.2 million 
for 2004’s first quarter reflects a gain of 5.5 percent over 
2003 numbers and an advance of 10.8 percent over 2002.  
 Comanche County had total sales of $25.9 million be-
tween January and March 2004, which represents a 4 per-
cent increase over the previous year and 2.7 percent ad-
vance over the same period two years previous. 
 Eastland was the only Cross Timbers county to see a 
decline in retail sales. The county had first quarter 2004 
sales of $49.4 million – down from $49.7 in 2003. The 
slightly lower numbers still represent a 37 percent increase 
over the 2002 sales estimate. 
 The State Comptroller’s Office collects and reports 
sales data on a quarterly basis.  
Zeb Pomerenke is a graduating MBA student at Tarleton 
State University. 
Per Capita Personal Income
Area Counties
Source:  U. S. Dept. of Commerce
Bosque Comanche Eastland Erath Hamilton
0
5
10
15
20
25
30
Thousands of Dollars
2000 2001 2002
RETAIL SALES
Area Counties, January - March
Source:  State Comptroller's Office
Bosque Comanche Eastland Erath Hamilton
0
20
40
60
80
100
Millions of Dollars
2002 2003 2004
 
Building Permit Values at an Eight-Year High 
By Ashley Mahone 
 
 Building permit values for the first nine months of 
2004 are up 30% from the same period last year.  Data re-
ported by the City of Stephenville show that permit values 
have not been this high since before 1996.  In June of this 
year, permits totaled over $11 million—far surpassing 
monthly totals from the past eight and a half years.  
 What contributed to such high values?  According to 
Stephenville’s building inspector, Troy Curtis, low interest 
rates are spurring construction.  Two major permits were 
issued in June.  Faith Lutheran Church was granted a per-
mit to add a youth center, including a gym, representing a 
total of $600,000.  The other major permit was granted to 
Stam, Ltd for the Commons Apartments, a 173 unit com-
plex on Vanderbilt Street, with an estimated value of $9.6 
million.  Other factors contributing to this year’s permit 
growth include a large number of single family housing 
permits business expansion permits, and permits for the 
construction of new business venues.  Curtis predicted that 
permit values will continue at this healthy pace as long as 
interest rates remain low. 
 Stephenville requires permits for all new construction 
and remodeling within its boundaries.  Changes in permit 
values precede actual construction expenditures. 
Ashley Mahone is a senior marketing major at Tarleton 
State University. 
 
Agricultural Prices Moderate 
By Aubrey Gideon 
 
 According to data from the Texas Agricultural Statis-
tics Service, prices of both crops and livestock and products 
declined in the third quarter from their historically high 
levels posted earlier this year. 
 During July of 2004, the index numbers for livestock 
and products dropped from 125 percent of its 1990-1992 
level in June to 121 percent.  This number then fell to 117 
percent in August and 114 percent in September.  The crop 
index number decreased from 111 percent in June 2004 to 
98 percent in July.  This statistic then dropped to 91 percent 
in August and to 90 percent in September.  The livestock 
and products price index stood at 112 percent of its 1990-
1992 value in September of last year, while the crop index 
value was 95. 
 The crop index numbers had the greatest effect on the 
index numbers for all farm products due to the greater de-
crease in percentage points.  In June 2004 the all-products 
index number was 120.  It then fell by 15 points over the 
next three months – by 9 points in July, by 3 points in Au-
gust, and by another 3 points in September to a value of 
105.  The level of this statistic was 106 in September of 
2003.   
 Beef cattle prices dropped over the third quarter from 
$89.90 in July to $89.30 in August to $87.30 in September.  
However, in spite of the lowered prices, July showed a 
19.9% increase over July 2003.  August showed an increase 
of 13.5 percent over August 2003 and September showed 
an increase of 4.4 percent. 
 Wholesale milk prices decreased from July to August 
(from $16.70 to $15.20), but the average price remained 
stable between August and September.  July’s price marks 
a 34.7 percent increase over July 2003; August’s price was  
13.4 percent higher than August 2003, and September’s 
average milk price was equal to the previous September‘s 
level. 
Aubrey Gideon is a senior accounting major at Tarleton 
State University 
 
 
BUILDING PERMITS
Stephenville, January - September
Source:  City of Stephenville
1999 2000 2001 2002 2003 2004
0
5
10
15
20
Millions of Dollars
INDEX NUMBERS OF PRICES
Received by Texas Farmers and Ranchers (1990-1992=100)
Source:  Texas Agricultural Statistics Service
Jul Sep Nov Jan Mar May Jul Sep
2003 2004
0
20
40
60
80
100
120
140 Livestock & Products
Crops


Cross Timbers Business Report

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Portal to Texas History