Ray Perryman is leader of the Perryman Group and Distinguished Professor at the International Institute for Advanced Studies.
It goes without saying that there is a lot going on in the economy these days. The United States (and most of the rest of the world) is dealing with high (if moderate) inflation, rising interest rates, ailing industries and markets, geopolitical tensions and a variety of other uncertainties to do with. That said, I remain optimistic about the potential for growth, although the path may not be as smooth as we’re hoping.
For Texas, recent performance has been strong. Last year (which ended in February which is the latest data available) the state added 604,800 net new jobs. That’s an annual job growth rate of 4.59%, significantly higher than the corresponding US rate of 2.91%. The professional and business services segment leads in terms of job creation, and all major industry groups saw job growth in Texas over the period.
Adding to this dynamism, the state continues to attract far more corporate locations, expansions and investments than any other. Current capital commitments and future opportunities are significant. We are also seeing an influx of people, including many highly skilled professionals. Things are starting to slow down a bit but positive expansion is expected.
Although the state’s industrial base is much more diverse than it has been in decades, it helps that oil and natural gas development and production has experienced a boom of record proportions. Uncertainty about global economic output and hence fuel demand is a dampening factor on price levels, but China’s reopening and surprise OPEC production cuts are a useful counterbalance. It looks like trading will continue in a profitable range going forward.
Over the next five years, we forecast that Texas economic output (real gross product) will grow at 3.49% annually, with mining (oil and gas) playing a dominant role. We also forecast an increase of approximately 1.3 million net new jobs through 2027, an increase of 1.83% per year. The largest sources of employment growth are projected to be the professional and business services industry group, as well as healthcare and social care.
Apparently, Texas cannot completely escape the current challenges. With the government providing $1 out of $6 in US exports, the performance of the international economy can’t help but significantly impact overall performance. Similarly, Texas businesses and consumers must face essentially the same inflationary pressures and higher lending rates as those in other areas. Despite these risks, Texas is well positioned to deal with whatever is coming and emerging with momentum. The state’s diverse industrial mix and vast endowment of natural resources will help mitigate the worst of any downturn that might come our way. Take care!
Like this:
Loading…
Comments are closed.