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Comptroller’s Economic Outlook

Updated August 20, 2008

Texas continues to fare better economically than most other states. The Texas economy, the world’s 12th-largest, continues to grow and is unlikely to slip into recession.

In fiscal 2007, Texas’ gross state product grew by 3.2 percent, versus a 2.0 percent increase for the national economy.

Jobs

• In the 12 months ending in July 2008 (July 2007 to July 2008), Texas gained close to 249,000 jobs, more than the next 11 top job-growth states combined (big states with job losses included Florida with 97,000 jobs lost, California with 76,000 and Michigan with 49,000). In the past 12 months, Texas accounted for 43 percent of the job gains for all states.
• In the past five years, Texas has gained a net 1.3 million new jobs.
• From June to July 2008 alone, the U.S. economy lost 62,000 jobs. Texas gained 17,500 jobs over the same period.
• In July, the Texas unemployment rate was 4.7 percent, substantially lower than the national rate of 5.7 percent.
• As of July 2008, Texas’ unemployment rate had been at or below the national rate for 19 consecutive months.

Housing

• Texas has weathered the national real estate crunch without significant damage to property values. The state has avoided the boom-and-bust cycle experienced in other states, racking up solid and lasting gains in value.
• Some aspects of the nationwide real estate slump have affected the state. Permits for new Texas single-family homes fell by 31 percent over the last year totals (June 2007 to June 2008), but the estimated mean average value of those permits rose by 7 percent.
• Existing home sales are slowing, but not as much as for the nation as a whole. In the 12 months ending in June 2008, total Texas sales of existing homes fell off by 12 percent, versus a national 17 percent decline. Prices of Texas existing homes held steady.
• As of June 2008, Texas permits for multi-family units had risen by 9 percent total over the year as compared to totals for the preceding year.
• The Texas foreclosure rate has remained stable for the last three years. As of June 2008, the Texas foreclosure rate was one in every 891 homes. Comparable rates in other states include Nevada’s one in 106; California’s one in 182; and Arizona’s one in 195.

Oil and Natural Gas

• Rising oil prices have spurred increased drilling activity in Texas. Crude oil’s price has risen by 61 percent over the last year, pushing the state’s drilling rig count up by 11 percent.
• As of August 20, crude oil futures were valued at $114.98 per barrel, more than $30 below the July peak. Natural gas futures were valued at $8.077 per MMBtu.
• The state’s 4.4 percent fiscal year increase in diesel tax revenue is a positive indicator of economic activity.

Fuel Prices and the Economy

• Higher prices appear to be affecting Texans’ driving habits. They’re opting for shorter drives, more in-state travel and vacations at closer destinations, such as state parks. Galveston, for instance, recently reported a 46 percent surge in beach park attendance, attributing the rise to high gas prices.
• Texas gasoline tax revenue in May, June and July 2008 saw year-over-year declines of 2.7 percent, 0.4 percent and 4.4 percent, respectively.
• In June 2008, the total number of miles driven in Texas was 4.2 percent lower than in June 2007. This mirrored results for the U.S. as a whole, where miles driven declined by 4.7 percent over the same period.

Taxes

• Texas sales tax receipts for July 2008 were up 10.4 percent from the same month the year before. However, slower economic growth has pushed the total growth in sales tax collections below its recent, double-digit pace. State sales tax receipts for fiscal 2008 are expected to be 6.5 percent higher than in the previous year.
• Motor vehicle sales tax collections have been falling for the past five months (March to July 2008). Yet, transaction prices have increased — hybrids in particular are often selling above retail price.
• Through July, year-to-date natural gas production tax collections were 38 percent higher than in the previous year; oil severance tax collections were 70 percent higher. The rise in taxes was driven both by higher values and greater production activity.

Consumer Confidence Index

• Consumer confidence across the nation is weak, as reflected in the lowest consumer confidence index numbers since 1992. Texas’ numbers remain fairly strong, however. In July, the U.S. index stood at 52 (with 1985 = 100). The Texas index, however, was 81.6 — the highest in the nation.