Housing, Energy & Texas Economic
Mike Reissig, associate deputy comptroller, explains why the Texas economy is resilient.
The recent recession was a turbulent time for economies around the world and for Texas. However, the housing sector, oil and gas production, and a helpful business environment helped Texas get through relatively better than most other states, and will boost the state’s economy going forward.
Q: Why did the housing bubble not affect Texas like other states?
A: The main thing was that while housing values were increasing all across the nation, what you found in Texas was that a much higher percentage of the increase of the value of houses was as a result of underlying strength in the economy and not of the housing bubble. So that as our values increased, within that increase was legitimate demand from people moving up to bigger houses, who had gotten some of the new jobs that were created in the state.
Q: Did the energy sector contribute to the lesser Texas recession?
A: There’s a misperception out there that the state would transition from being an oil and gas economy to being a high-tech economy. But what really happened was that you had the oil and gas economy still being a big part of our economy, and we added a large high-tech economy. And so the oil and gas economy, which sometimes tends to be a little counter-cyclical compared to the rest of the nation, actually will help us, will buffer us in weak economic times. It is kind of like having a portfolio of investments, part of which tends to be counter-cyclical. That’s what the oil and gas sector does for us now.
Q: What factors contribute to Texas’ reputation as having an environment for success?
A: Labor costs are relatively low in the state. Taxes are low in the state compared to other parts of the nation. We have a lot of available land. We put in place tort reform that has had a beneficial impact on business in the state. We’ve really created an environment that is going to help us significantly over the coming decade and even further. I would expect our economic performance compared to the rest of the nation is going to continue to be positive for the foreseeable future. TR
Economic Development and Analysis Profile: Serving Region 8 – Russell Gallahan
Since 2005, Russell Gallahan has served as an economic development analyst for the Comptroller’s Economic Development and Analysis and the regional representative for South Texas.
Region 8 encompasses 26 counties along the lower Rio Grande River from Val Verde and Edwards counties in the northwest to San Patricio County along the Gulf of Mexico, southward to Cameron and Hidalgo counties.
Previously, Russell worked more than 15 years in the private sector, developing and operating hotel projects in Texas, Tennessee and Florida. He is the administrator for the Type A and Type B sales tax for economic development and provides assistance to local governments on implementation of all local sales taxes.