Comptroller’s Economic Outlook

Updated July 2, 2009

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.

Jobs

• The U.S. lost 5.4 million jobs from May 2008 to May 2009, with more than half of the losses in the first five months of 2009.
• Texas lost 24,700 jobs in May 2009.
• Texas’ May 2009 unemployment rate was 7.1 percent, an increase from April. The June U.S. rate is 9.5 percent, up significantly from 5.6 percent a year ago.
• The Texas unemployment rate has been at or below the national rate for 29 consecutive months.
• In the 12 months ending in May 2009, Texas lost 222,600 jobs.
• In the past five years, the Texas economy added close to 1 million new jobs.

Housing

• Thus far, Texas has weathered the national real estate crunch without significant damage to property values but sales and construction activity are slowing. Despite its continuing resiliency, Texas is unlikely to remain immune from the national real estate crunch.
• The number of building permits for single-family homes dropped by 28.5 percent over the last year. In May 2009, 5,416 permits were issued.
• Multi-family building permits are also down, falling by 76 percent from May 2008 to May 2009.
• Sales of existing homes are slowing as well. In the 12 months ending in May 2009, Texas sales fell by 21 percent.
• Prices for existing single-family homes fell by 0.5 percent from May 2008 to May 2009.
• The Texas foreclosure rate has remained largely stable for the last three years. Texas experienced 9,813 foreclosure filings in May 2009. In April, there were 11,314 foreclosure filings.
• As of May 2009, the Texas foreclosure rate was one in every 961 mortgages. Comparable rates in other states include Nevada’s one in 64, California’s one in 144 and Arizona’s one in 158.

Oil and Natural Gas

• Crude oil prices are now 51 percent below the level of one year ago.
• Crude oil futures closed at $69.31 per barrel on July 1, 2009, more than double this past winter’s lowest price of $33.98 in February.
• In fiscal 2008, production tax collections for natural gas were up 42 percent. Tax collections for oil were up 72 percent.
• Natural gas production tax collections for the first ten months of fiscal 2009 are 36 percent lower; oil tax collections are 34 percent lower than in the same ten months in fiscal 2008

Taxes

• Texas sales tax receipts for May 2009 were down 5.2 percent the same month in the previous year.
• Thus far, state sales tax receipts for fiscal 2009 are up 0.5 percent from fiscal 2008. Slower economic growth, however, has pushed the growth in sales tax collections well below its former double-digit pace.
• Motor vehicle sales tax collections year-to-date through June 2009 were 24.2 percent lower than the same period last year.
• Transaction prices for new cars declined by 10.4 percent from June 2008 to June 2009, to an average of $23,502
• Nationally, auto leasing accounted for 20.7 percent of auto sales in June 2009, down from 25.5 percent in June 2008.
• An estimated 250,000 new vehicles nationwide are expected to be sold between August and November 1, 2009, due to the Cash for Clunkers legislation currently awaiting the President’s signature. Texas could see approximately 22,000 new vehicle sales as a result of the legislation – good news for auto dealers and buyers alike. People qualifying for the program could see as much as a $4,500 credit toward the purchase of a new vehicle with a qualifying “clunker” trade-in vehicle.

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.

Consumer Confidence Index

• Consumer confidence across the nation remains very weak, but has begun to bounce back during the last three months. In June 2009, the U.S. index stood at 49.3 (with 1985 = 100). Texas and surrounding states fared better than the rest of the nation. Texas’ regional index fell to 72.8, down 12 percent for the year.