Your Texas Economy

Current through: Tuesday, April 21, 2020

Texas Economy

Texas produces 9 percent of U.S. GDP, second only to California

Texas has a large and diverse workforce made up of 13 million workers

Texas is younger and faster growing than the nation

2

Overview of Texas Economy

The Texas economy has declined in the wake of the COVID-19 pandemic after steady growth in 2019 and early 2020 Payrolls grew 2.2 percent in 2019 (Dec./Dec.) Unemployment began the year at a near-record low of 3.5 percent.

With the virus outbreak and subsequent containment measures, along with energy price declines, the state outlook turned negative in March Services and manufacturing output has declined Sharp contraction in the energy sector Unemployment claims have reached record highs

The Dallas Fed’s Texas employment forecast predicts 2020 job losses, likely in excess of the national average

3

Texas Job Growth Outpaces U.S. So Far in 2020

Texas0.9

U.S.-0.6

-5-4-3-2-1012345

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Job growth (percent), Dec./Dec.*

4

*Seasonally adjusted, annualized rate.NOTE: Last data points are annualized job growth for Texas (Mar. 2020/Dec. 2019) and U.S. (Mar. 2020/Dec. 2019).SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tae000000.aspx

First Quarter Growth Dragged Down by March Decline

Texas0.9

U.S.(0.6)

-1.0-0.50.00.51.01.52.02.53.03.5

2016 2017 2018 2019 2020*Seasonally adjusted, annualized rate.NOTE: Q1 data through March 2020.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas. DATA: https://www.dallasfed.org/research/econdata/tae000000.aspx

Job growth (percent), quarter/quarter*

5

-0.6 -0.4

1.40.1

1.0

-9.0

-0.8

1.82.7

-0.7

-5.0

0.9 0.52.3

3.2

0.5

-1.2-2.4

2.1

-1.2

4.7

1.0

-10-8-6-4-20246

Total Trade,Transp.& Util.

(19.6%)

Gov't(15.4%)

Prof. &Bus. Serv.

(14.2%)

Educ. &HealthServ.

(13.6%)

Leisure& Hosp.(10.8%)

Mfg.(7.0%)

Fin.Activ.(6.3%)

Constr.(6.1%)

Info. &OtherServ.

(5.2%)

Oil & Gas,MiningSup.

(1.7%)

U.S. (Mar. 2020/Dec. 2019)Texas (Mar. 2020/Dec. 2019)

Job growth 2020 YTD (percent)*

*Seasonally adjusted, annualized rate.NOTE: Numbers in parenthesis indicate share of total state employment for most recent monthly data.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tx-emp-ind.aspx

6

2020 Texas Job Growth Outperforming U.S. In Most Industries So Far

Nevertheless, Texas Job Growth Weakening Across Most Sectors Compared to 2019

0.9 0.52.3

3.2

0.5

-1.2-2.4

2.1

-1.2

4.7

1.0

-10-8-6-4-202468

1012

Total Trade,Trans. &

Util.(19.6%)

Gov't(15.4%)

Prof. &Bus. Serv.

(14.2%)

Educ. &HealthServ.

(13.6%)

Leisure &Hosp.

(10.8%)

Mfg.(7.0%)

Fin. Act.(6.3%)

Constr.(6.1%)

Info. &OtherServ.

(5.2%)

Oil & GasExtract. &

MiningSup.

(1.7%)

2018 2019 2020 YTD (Mar 2020/Dec. 2019)

Job growth (percent), Dec./Dec.*

*Seasonally adjusted, annualized rate.NOTE: Numbers in parenthesis indicate share of total state employment for most recent monthly data.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tx-emp-ind.aspx

7

Most Large Texas Metros Beginning to See Job Losses

0.91.9

-0.7-1.3

-3.3

-1.8

-4-3-2-1012345

Texas Houston(24.7%)

Dallas(21.1%)

Austin(8.7%)

Fort Worth(8.4%)

San Antonio(8.4%)

2017 2018 2019 2020 YTD (Mar 2020/Dec. 2019)Job growth (percent), Dec./Dec.*

*Seasonally adjusted, annualized rate.NOTE: Numbers in parenthesis indicate share of state employment for most recent monthly data.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tx-emp.aspx#tab3

8

Texas Unemployment Rate Spikes Above National Average

4.7

4.4

2

3

4

5

6

7

8

9

10

11

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

U.S.

Texas

Unemployment rate (percent)*

*Seasonally adjusted.NOTE: Data through March 2020.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tx-emp-ind.aspx

9

Texas Initial Unemployment Claims Surge to Record Highs

0

500

1000

1500

2000

2500

3000

Texas

Weekly claims, indexed Jan. 2000 = 100

*Seasonally adjusted.NOTE: Data through the week ending April 11, 2020.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tx-emp-ind.aspx

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ENERGY

Texas is #1 producer of oil and natural gas in nation

Approximately 30% of U.S. refinery capacity and 75% of U.S. petrochemical production is in Texas

Low energy prices hurt Texas economy on net

11

Oil Prices Plummet in March

$29.21

394

0

100

200

300

400

500

600

700

800

900

1,000

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Dollars Rig Count

Texas Rig Count

Oil Price

Natural Gas Price $1.79

12

NOTES: Oil price is dollars per barrel. Natural gas series is dollars per million Btu, multiplied by 10. Data through Mar. 2020.SOURCES: Wall Street Journal; Baker Hughes; U.S. Energy Information Administration.

Manufacturing sector leading indicator of economic growth

Texas produces 10% of U.S. manufactured goods

Dallas Fed’s Texas Manufacturing Outlook Survey offers early look at turning points and insight on trends

MANUFACTURING

13

-60-50-40-30-20-10

010203040

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Index, 3-month moving average*Manufacturing

ProductionExpansion

Contraction

Oil Bust

Texas Manufacturing Production in Decline

*Seasonally adjusted.NOTE: Data through March 2020. Grey bars represent Texas recession.SOURCE: Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey (TMOS).DATA: https://www.dallasfed.org/research/surveys/tmos

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Gulf coast ports are major exporters of oil and gas, oil products and petrochemicals

Texas is the top exporting state and accounts for 20% of U.S. exports

Texas-Mexico border ports also process over half of state exports

EXPORTS

15

February Texas Exports Continued to Outperform Nation’s

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Index, Jan. 2008=100*

Mexico is Texas’ top trading partner, receiving

around 30% of the state’s exports.

*Seasonally adjusted, real dollars.NOTE: Data through February 2020.SOURCES: U.S. Census Bureau; Bureau of Labor Statistics; seasonal and other adjustments by FRB Dallas.

16

Texas Oil and Gas Exports Surged Following Removal of the Oil Export Ban in 2015

*Seasonally adjusted, real dollars.NOTE: Data through February 2020. Share of Texas’ 2019 exports in parentheses. SOURCES: U.S. Census Bureau; Bureau of Labor Statistics; seasonal and other adjustments by FRB Dallas.

17

020406080

100120140160180200

2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

200

400

600

800

1000

1200

1400

1600

Oil and Gas (22.9%)Petroleum and Coal Products (15.2%)Computers and Electronics (14.9%)Chemicals (13.6%)Transportation Equipment (8.6%)Industrial Machinery (7.1%)

Index, Jan. 2011 = 100 Index, Jan. 2011 = 100

Accounts for 70% of private-sector output in Texas

Service industry makes up the bulk of the Texas economy

Dallas Fed’s Texas Service Sector Outlook Survey provides timely insight into this key sector

SERVICES

18

Texas Services Revenue and Retail Sales Plummet in the Wake of COVID-19

-50-40-30-20-10

01020304050

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Index, 3-month moving average*Expansion

Contraction

Oil BustServicesRevenue

RetailSales

*Seasonally adjusted.NOTES: Data through March 2020. The TROS is a component of TSSOS using information only from retail and wholesale trade sectors. Grey bars represent Texas recession.SOURCES: Federal Reserve Bank of Dallas Texas Service Sector Outlook Survey (TSSOS) and Texas Retail Outlook Survey (TROS).DATA: https://www.dallasfed.org/research/surveys/tssos

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HOUSING

Single-family housing sector was slow to recover

Texas house prices have tracked the nation since the Great Recession

Housing markets currently tight in most of the state

20

February Texas Home Sales Elevated, Inventories Dipping

2

3

4

5

6

7

8

9

10,000

15,000

20,000

25,000

30,000

35,000

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Months supply of inventory*

Inventory

Home sales

Total existing home sales*

*Seasonally adjusted.NOTE: Data through February 2020.SOURCES: Multiple Listing Service; seasonal and other adjustments by FRB Dallas.

21

Texas Median Home Price Remains Near Record High

150

175

200

225

250

275

300

325

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

U.S.

Texas

Dollars (thousands), four-month moving average*

*Seasonally adjusted, real dollars.NOTE: Data through March 2020.SOURCES: Multiple Listing Service; seasonal and other adjustments by FRB Dallas.

22

Metro AreaMarch Median

Price* Y/Y % ChangeAustin $338,143 10.0%Dallas $298,093 2.8%

Houston $248,377 2.3%Ft. Worth $248,209 2.5%

San Antonio $242,772 5.0%

2020 Texas Economic Outlook

The rapid onset of COVID-19 and shelter-in-place measures across Texas in March have caused a significant decline in output and employment.

As of mid-April, new unemployment claims have exceeded 1 million, suggesting an unemployment rate in excess of 12 percent.

Leading indicators suggest continued weakness in the state economy moving forward.

For more information, see the Texas Employment Forecast at https://www.dallasfed.org/research/forecast/2020/emp200417.aspx

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www.dallasfed.org/research/texas