|
April 2009
Texas Economy Remains in Recession
The Texas economy remains in recession. However, signs suggest the rate of decline may have slowed in recent weeks as pervasive pessimism about economic conditions lessened. Some sectors have stabilized for the moment, perhaps portending the emergence of "green shoots" that could eventually end the recession. Other sectors continue their decline unabated. While current conditions are somewhat more mixed than they were six weeks ago, the overall economic picture remains clearly negative with few signs that the downturn will end in the near future.
Employment
Payroll employment continues to weaken, declining at a 4.6 percent annualized rate in March. Texas has now lost just over 117,000 jobs through the end of March. The loss offsets the 72,000 jobs gained in 2008 and puts total nonfarm employment at late-2007 levels.
Private-sector employment has fared poorly in 2009, while government employment has increased. The private sector shed over 128,000 jobs this year—5.7 percent on an annualized basis. The only sector experiencing growth has been education and health services. All others registered declines (Chart 1).
Housing
Construction has been particularly hard hit in the past two months. Construction employment declined at an annual rate of 18.7 percent in the first quarter. This tracks with the 31 percent drop in nonresidential construction contract values and the 8 percent decline in residential construction contract values.
Existing-home sales continue to be depressed and are well below prior-year levels (Chart 2). Lower mortgage rates should spur sales, however, and contacts have reported somewhat greater foot traffic in recent weeks.
Months of existing-home inventory have risen in Texas' major metros but remain well below the national average (Chart 3). Given that Texas does not have the glut of new or used homes plaguing other parts of the nation, the housing market is better positioned to turn around once a broader economic recovery takes hold.
Oil and Gas
Oil prices have recovered some ground over the past few months and are currently fluctuating near $50 per barrel. Natural gas, on the other hand, continues to hover at multiyear lows, trading below $4 per million British thermal units.
Lower prices have put pressure on energy-sector employment in Texas. Oil and gas employment dropped at an 8.1 percent annualized rate through the end of March. The Texas rig count has declined 46.2 percent in 2009 and is now off 53 percent from its peak in September 2008 (Chart 4).
Exports
Exports have been hard hit by the recession in recent months but may be showing signs of stabilization. After falling 11 percent in January, exports rebounded in February, growing 6.2 percent. This is comparable to the nation's decline of 8.9 percent and increase of 2.8 percent, respectively. However, the monthly Texas export data is notoriously volatile, and only time will tell if this improvement signals the beginning of a bottoming-out (Chart 5).
Outlook
Over the past couple months the economy has continued to weaken and remains in recession. However, there are signs that seem to signal a slowing in the rate of decline rather than a bottom.
Contacts report that residential construction may be stabilizing at low levels, and consumption has held up relatively well. This is offset by weakness in the labor market and a sharply declining rig count.
The Texas Leading Index has fallen drastically over the past three months (Chart 6). Though the outlook is negative, there is hope that the stabilization in energy prices and the rebound in equity markets could lead to more encouraging readings in the future.
—Jason L. Saving and Jackson Thies
About
the Authors
Saving is a senior economist and Thies is a research assistant in the Research Department at the Federal Reserve Bank of Dallas. |
|
|
