Wednesday, March 18, 2009

How will Texas' economy play in the Rick vs. Kay race?

The economy is in a slump. Is it a recession? A depression? Do those terms even mean anything anymore?

Whatever it is, we're in bad shape. Texas is probably not in as bad of shape as the rest of the country, but with oil and gas prices sinking so low so fast it looks like the Texas economy is due for some hurt.

The Dallas Fed has this scary looking figure for us to ponder (link):

I honestly have no idea what the lines even indicate, I just know that up is good and down is bad. Scary, even in Texas.

The Dallas Fed also says, though, that Texas is in a pretty good spot relatively speaking (link). Excerpt follows:
The theories and practical applications suggest a potential for business climate differences to affect growth rates—both between nations and within a single country. And when we look at the U.S., we do see a strong correlation between favorable business climates and above-average economic growth, with Texas generally scoring high on both counts.

State business climates differ dramatically in terms of taxes, according to groups such as the nonpartisan Tax Foundation. The organization's most recent evaluation of state business-tax climates places Texas seventh, with top 10 rankings for individual income and unemployment-insurance taxes.[13]

Texas has no individual income tax. At first blush, it may seem odd to put individual income taxes in a business ranking, but it's important to remember that sole proprietorships make up three-quarters of American enterprises. Their income almost always appears on individual rather than corporate returns.

Researchers have found that levies on individuals' incomes are among the worst in terms of distorting economic activity. They discourage production and savings as well as work. That's why onerous state income tax systems are among the biggest determinants of state economic growth.

The Dallas Fed also has this much easier to understand picture... green is good, and Texas is green.

Green is good. Texas is green. Other than the disaster that is the Nevada economy right now, a lot of those green states are hanging in there.

The Comptroller of Texas also puts the Texas economy into perspective (link). Excerpt follows:

The Texas economy, the world’s 12th-largest, continues to fare better than those of many other states. But Texas is feeling the effects of the worldwide recession.

According to the National Bureau of Economic Research, the U.S. economy peaked in December 2007 and has been in recession since then. Nevertheless, Texas fared well in fiscal 2008 (September 1, 2007 - August 21, 2008), when its gross product expanded more than twice as fast as the nation’s (4.2 percent versus 1.9 percent).

Texas’ economic growth thus far in fiscal 2009 has been much slower. The Comptroller’s office estimates that the Texas gross state product will expand by just 1.8 percent throughout fiscal 2009. The U.S. economy, by contrast, is on track to shrink by 0.9 percent over the fiscal year.

I am not sure Rick will be able to effectively say, "hey, the economy REALLY sucks everywhere else, and is only sort of bad here in Texas." Am I off? Nor do I think that Kay will be able to say, "the economy sucks, Rick is to blame."

If unemployment in Texas remains more than a point and a half below the national rate, maybe Rick can take some credit. Maybe. If Texas really does continue to "grow" its economy as the Comptroller estimates, while the U.S. economy actually contracts, that's a pretty big deal.

The Comptroller has a graph about the jobs issue (link):

They also have some job related facts to keep it all in perspective. Excerpt follows:
  • The U.S. lost 4.2 million jobs from February 2008 to February 2009, with almost two thirds of the losses in the past four months.
  • Texas lost 50,600 jobs in January 2009.
  • Texas’ January 2009 unemployment rate was 6.4 percent. The February U.S. rate was 8.1 percent, up significantly from 4.8 percent a year ago.
  • The Texas unemployment rate has been at or below the national rate for 25 consecutive months.
  • In the 12 months ending in January 2009, Texas gained 19,900 jobs.
  • From December 2007 to December 2008, Texas accounts for 80 percent of entire job gains in the nine states with increased employment.
  • In the past five years, the Texas economy added more than 1.2 million new jobs.
It is a mess of information to describe one very simple thing: The U.S. economy has sucked for a year and a half; the Texas economy has started sucking a little less badly as of a few months ago. How much will they both suck? How will that suckage play in the Rick versus Kay race?

That's what this blog is for. Keep reading, and keep sending me info. The Comptroller numbers came from an anonymous tipster without commentary, which is also fine, although I prefer to hear what people are thinking for themselves. Email me at or post your thoughts in the comments section.

1 comment:

  1. It is a null issue. Neither of the two wins. Republicans in general lose.


Hey now, campaign characters. Be nice. I know a lot of you on both sides, so I don't want any overly foul language, personal attacks on anyone other than the candidates themselves, or other party fouls. I will moderate the heck out of you if you start breaking the bounds of civility.