Skip to main content

Dallas Fed report: Worst of Texas’ economic woes may be over

Report also examines Latino pay gap, Hispanic education deficits

For immediate release: March 16, 2010

DALLAS—The latest issue of the Federal Reserve Bank of Dallas' Southwest Economy features articles on the Texas economy, the Latino pay gap in Texas and Hispanic education deficits.

Texas has been hit much harder by the most recent recession than previous ones, but the latest economic data and anecdotal evidence suggest the worst of the state’s economic woes may be over, according to associate economist Laila Assanie and research officer and senior economist Pia Orrenius in “Texas Economy Shakes Off Rough Ride in 2009.”

Hopeful signs are emerging in the labor market and across several sectors, including manufacturing, exports, housing and energy.

The Dallas Fed’s Texas Leading Index has also climbed sharply, suggesting job growth will pick up in coming months, the authors state. The employment forecast based on the leading index points to employment growth of 1 to 2 percent for Texas in 2010.

Still, lingering risks, including cautious consumers, tight bank lending standards, depressed conditions in commercial real estate, low venture capital investment, rising mortgage delinquencies and weakness in the national economy, could stall the nascent recovery, Assanie and Orrenius write.

“The Texas economy has steadied, although it has not firmed up enough to take off,” Assanie and Orrenius conclude.

In “Texas’ Latino Pay Gaps: Taking a Closer Look,” research analyst Emily Kerr, Orrenius and Agnes Scott College professor Madeline Zavodny find most of the Texas Latino wage gap can be explained by characteristics such as education, immigrant status and occupational choice.

In the follow-up to an article in the previous Southwest Economy, the authors find educational attainment explains 55 percent of the in-state Latino wage gap vis-à-vis non-Hispanic whites and 20 percent of the gap relative to Latinos living in other states.

“To a large extent, education and occupation are matters of individual choice and institutional responsibility,” the authors write. “Improving educational outcomes of Texas Latinos will give them access to higher-paying occupations.”

In an “On the Record” conversation, economist Richard Fry, senior research associate at the Pew Hispanic Center, says Hispanics are a young enough and large enough population to make a big impact on the U.S. labor force.

“Whether we continue to have a more-educated workforce depends in part on increasing the education and skills of Hispanic youths,” he says.

Key factors affecting Hispanic educational attainment include English proficiency and disadvantaged socioeconomic backgrounds, Fry says.

-30-

Media contact:
Alexander Johnson
Phone: (214) 922-5288
e-mail: alexander.johnson@dal.frb.org