Comptroller’s Economic Outlook

Updated March 19, 2010

The Texas economy, the world’s 12th-largest, continues to fare better than those of many other states. But Texas felt the effects of the worldwide recession during 2009.

According to the National Bureau of Economic Research, the U.S. economy peaked in December 2007 and entered recession. The Texas economy continued to grow through most of 2008, with employment peaking in August that year, then Texas joined the nation in losing jobs. During 2009, Texas’ gross state product (GSP) declined more slowly than the U.S. economy (-1.7 percent versus -2.5 percent.)

Despite the state’s economy contracting in 2009, Texas’ relative economic advantage should continue as the state and U.S. economies turn around and expand again in 2010. Although job growth will continue to lag the renewed expansion of economic production, the Comptroller’s office estimates that the Texas’ GSP will grow by 2.6 percent during calendar 2010. The U.S. economy should grow at a slower rate of 2.0 percent during the year.

Jobs

• Texas’ January 2010 unemployment rate was 8.2 percent, unchanged from December (revised from 8.3 percent). The February U.S. rate was 9.7 percent, unchanged from January.
• Total nonagricultural employment in Texas increased by 14,800 jobs in January. Texas has gained nearly 21,900 jobs in the past four months, while the nation lost 295,000 over the same four-month period.
• The U.S. lost 3.3 million jobs from February 2009 to February 2010.
• The Texas unemployment rate has been at or below the national rate for 36 consecutive months.

Housing

• Thus far, Texas has weathered the national real estate crunch without significant damage to property values but sales and construction activity have slowed. Despite its continuing resiliency, Texas is not immune from the national real estate crunch.
• • 4,843 building permits for single-family homes were issued in January 2010, the fourth consecutive month representing year-over-year increases. The number of permits in the 12 months ending in January 2010 was 64,705, a decrease of 10 percent from the period one year earlier.
• Multi-family building permits are down, from 2,351 units in December 2008 to 993 units in December 2009. The number of permits issued in the 12 months ending in December 2009 was 16,541, a decrease of 66 percent from the period one year earlier.
• Sales of existing homes fell in January 2010 to the lowest monthly total (10,217) since the U.S. entered recession in Dec. 2007. Compared to January 2009, home sales declined 4.8 percent.
• In Texas, the median price for existing single-family homes increased by 4.0 percent from January 2009 to January 2010.
• The Texas foreclosure rate has remained largely stable for the past three years. Texas experienced 12,225 foreclosure filings in January 2010.
• In January 2010, the Texas foreclosure rate was one in every 785 mortgages. This was substantially better than Nevada’s one in 95, Arizona’s one in 129 and both Florida and California at one in 187.

Consumer Confidence Index

• U.S. consumer confidence fell by 10.5 points from January to February 2010, and still remains pessimistic at a level of 46.0, more than 54 percent below its 1985 baseline level. Even so, nationwide consumer confidence has rebounded from its recent low in February 2009, and now stands 81.8 percent higher than its level a year ago.
• Texas and surrounding states fared better than the rest of the nation, with the Texas regional index down 21.7 percent from its 1985 baseline. Texas’ regional index rose from 72.3 in January to 78.3 in February, and is now up 54 percent from its level a year ago.

Oil and Natural Gas

• The all-time high crude oil closing price was $145.29 on July 3, 2008, which preceded a 7-month decline to a low point of $33.98 in February 2009.
• Crude oil futures closed at $82.20 per barrel on March 18, 2010, more than double the level of one year ago.
• In fiscal 2008, production tax collections for natural gas were up 42 percent over fiscal 2007. Tax collections for oil were up 72 percent.
• By contrast, in fiscal 2009 production tax collections for natural gas were down 48 percent over fiscal 2008. Tax collections for oil were down 39 percent.
• Natural gas and oil production tax collections combined are significantly lower for the first six months of fiscal year 2010 over fiscal year 2009.

Taxes

• Texas sales tax receipts for February 2010 were down 8.8 percent from February 2009.
• For fiscal 2009, state sales tax receipts are down 2.7 percent from fiscal 2008.
• Motor vehicle sales tax collections for fiscal 2009 were $2.569 billion, down 22.5 percent over fiscal 2008 amount.
• The nationwide core transaction price for a new car or truck during the first 15 days of January 2010 rose 2.73 percent to $25,631 from $24,949 in January 2009.
• For the first 15 days of January 2010, total national industry auto sales were 568,965 units, up 32.3 percent compared to first 15 days of January 2009.
• Nationally, the lease share of new vehicle purchases increased to 24.0 percent of new vehicle purchases; that’s 8.0 percent higher than in January 2009.

Stimulus Package

• In Texas, an estimated $18 billion in federal stimulus money is flowing to state and local governments. The Comptroller’s office is tracking the $14.3 billion that comes through the state Treasury. The Comptroller’s analysis is ongoing. For the latest information, visit our ARRA Web site, A Texas Eye on the Dollars.

Cap and Trade

• Efforts to reduce greenhouse gas emissions could negatively impact the Texas economy. The state could see 173,000 to 425,000 fewer jobs than expected in 2030 as a result of increased energy prices from the cap and trade portion of the recently proposed bill. The resulting decline in gross state product is estimated to be between $25 billion and $58 billion.
• The Comptroller’s office is continuing to analyze potential implications and assess how green jobs and energy efficiency programs in the proposals could offset negative impacts. For the latest information, visit our Cap and Trade Web page.