2018 Texas Economic Outlook: Firing on All Cylinders

Transcription

1 218 Texas Economic Outlook: Firing on All Cylinders Keith Phillips Assistant Vice President and Senior Economist 4/5/218 The views expressed in this presentation are strictly those of the presenter and do not necessarily reflect the positions of the Federal Reserve Bank of Dallas or the Federal Reserve System. Any secondary distribution of this material is strictly prohibited.

2 Texas Economic Growth Picked Up in 217 After Energy Slump, Expected to Accelerate This Year In five years prior to 215, growth in energy, construction and exports provided a strong stimulus to Texas. In 215 and 216, low oil prices and strong dollar reduced job growth but Texas did better than other energy states. Last year, Texas employment picked up, growing faster than the nation and near trend. Pickup mostly due to a rebound in energy and manufacturing sectors. Jobs grew 2.1 percent last year and are expected to accelerate to about 3.4 percent in

3 ID UT NV WA OR CO CA AZ TX FL OK SC NC RI MT US GA PA HI MN NY MA MI TN SD MS WY MO NJ DC NM NH IN AL IA IL WV WI NE OH KY ME VA KS AR CT DE LA MD VT ND AK 217 Texas Job Growth 9 th Fastest Among States Percent Change, Dec Dec TX U.S NOTE: Black bars represent large energy-producing states. SOURCE: Bureau of Labor Statistics. 3

4 AK NV VA NJ NH WY HI TN GA UT TX OH WA ID AZ CO NM WV SC FL AL MD NC OR SD CT US MO CA ME MI IN WI NY DE IL MA LA PA RI KY OK MS MN KS DC VT NE AR IA MT ND 218 Texas Growth Picking Up, 11 th Fastest Among States Percent Change, Dec Feb TX 3 2 U.S NOTES: Black bars represent large energy-producing states. Growth rates are seasonally adjusted. SOURCE: Bureau of Labor Statistics. 4

5 Texas Job Growth Usually Above the Nation s Percent, Y/Y 5 U.S. 4 Texas NOTE: Shaded bars represent seasonally adjusted, annualized growth from Dec. 217 to Feb Source: Bureau of Labor Statistics, Federal Reserve Bank of Dallas 5

6 Texas Unemployment Rate Near Lowest Level Since 197s Percent, SA US unemployment rate Texas unemployment rate SOURCE: Bureau of Labor Statistics. (Feb) 4.1 (Feb) 4. 6

7 Texas Economy Weakened in 215 and 216 But Remained in Expansion Percent, M/M SAAR (Texas Business-Cycle Index) 2 3.8% trend NOTE: Shaded areas represent Texas recessions SOURCE: Federal Reserve Bank of Dallas 7

8 I-35 Corridor Continuing To Grow, Houston Rebounding -1-2 Percent, Dec./Dec Texas Houston (24.7%) Dallas (21%) 3.2 Job Growth, San Antonio (8.5%) 7.2 Austin (8.5%) 2.7 Fort Worth (8.4%) 2.3 El Paso (2.5%).9 Corpus Christi (1.5%) NOTES: Shaded bars represent annualized growth from Dec. 217 to Feb Figures in parentheses represent shares of total state employment. SOURCES: Bureau of Labor Statistics, Federal Reserve Bank of Dallas. 8

9 Most Industries Picking Up So Far This Year; Energy Jobs Surging Percent, Dec./Dec Trade, Government Transp & Utilities (15.8%) (2%) Professional & Business Svcs (13.7%) Health & Private Education (13.6%) Job Growth Leisure & Hospitality (1.9%) Manufacturing (6.9%) Financial Activities (6.2%) Construction (5.9%) Natural Resources & Mining (1.8%) Information (1.6%) NOTES: Shaded bars represent annualized growth from Dec. 217 to Feb Figures in parentheses represent shares of total nonfarm employment. SOURCES: Bureau of Labor Statistics, adjustments by Federal Reserve Bank of Dallas. 9

10 Texas Service Sector Continuing to Expand Index 6 4 Mar. ' TSSOS Revenue TROS Revenue NOTE: Seasonally adjusted. SOURCE: Federal Reserve Bank of Dallas Texas Service Sector and Retail Outlook Surveys. 1

11 Texas Manufacturing Growing Strongly Index 6 4 Mar. ' Production Volume of New Orders -6 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 NOTE: Data are seasonally adjusted. SOURCE: Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey. 11

12 Share of Texas Jobs Tied To Exports 4th Highest Among States AK WA SC TX KY LA ND MI NE IN IA IL TN AL OR OH DE MS KS MN GA CA SD CT WI VT WV UT NC AZ AR NJ NY ID MA NV PA MO NH ME MT FL RI VA WY NM OK MD CO DC HI Percent 12 Destination of Texas Exports, Other 33% Mexico 4% 8 TX 6 4 South Korea 3% China 5% Canada 8% European Union 11% 2 SOURCES: International Trade Administration; WISERtrade; Bureau of Economic Analysis. 12

13 State Exports Near All-Time Highs Index, SA, Real Jan. 2= Texas Texas Value of the Dollar U.S. minus Texas Index Jan. 1988= ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 SOURCES: U.S. Census, Bureau of Labor Statistics, WISERtrade, Federal Reserve Bank of Dallas

14 Texas Construction Contract Values Moderating So Far This Year Real $, Mil 5MMA, SA Total Residential Non Residential 1 Non Building SOURCES: F.W. Dodge, Federal Reserve Bank of Dallas. 14

15 Residential Home Construction Steady Since 214 Index, Jan 2 = Residential construction contract values 15 Total housing permits 1 Housing starts 5 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 NOTE: Data are indexed on seasonally adjusted, five-month moving averages. SOURCES: U.S. Census Bureau, F.W. Dodge, Bank of Tokyo-Mitsubishi UFJ, adjustments by Federal Reserve Bank of Dallas. 15

16 Very Low Rate of Negative Equity Among Texas Mortgages Percent Percent of Mortgages "Under Water" Q Q Nevada Arizona Florida Michigan California Idaho Texas U.S. SOURCE: CoreLogic 16

17 Residential Inventories Remain Low in Texas Months Texas U.S '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 SOURCE: Multiple Listing Service. 17

18 Oil Prices Holding Above $6 This Year Rig Count Picking Up Number Nominal $ 1 Rig Count Oil price $ Gas price (x1) $ NOTE: Data are weekly, last data point is the week of March 23, 218. SOURCES: Oil and Gas Journal, Baker Hughes. 18

19 Energy Survey Suggests Continued Growth in Energy Activity in 218 Index Q2 217 Q3 217 Q4 217 Q1 218 Price per barrel $59 (218) $5 (217) $63 (218) Business Activity Capital Expenditures Employment Company Outlook Uncertainty End of Year Price Forecast SOURCE: Federal Reserve Bank of Dallas. 19

20 Historically, Severe Weather Events Have Had Temporary Impacts on Gulf Coast Job Growth Thousands of jobs, SA 4, 3,5 3, 2,5 2, 1,5 Hurricane Alicia M/M percent change, SAAR Strike adjustment Telecom Strike -3 Jun-83 Jul-83 Aug-83 Sep-83 Oct-83 Nov-83 Dec-83 2 M/M percent change, SAAR Texas Floods M/M percent change, SAAR 4 Hurricane Ike Jun-8 Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 Dec-8 Tropical Storm Allison M/M percent change, SAAR 4 Tropical Storm Claudette -2-4 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 Oct-1 1, '75 '77 '79 '81 '83 '85 NOTE: Gray bars represent Texas recessions. '87 '89 '91 '93 '95 '97 '99 '1 '3 '5 '7 '9 '11 '13 '15 '17 SOURCES: Bureau of Labor Statistics; National Oceanic and Atmospheric Administration; adjustments by Federal Reserve Bank of Dallas Houston Memorial Day Flood Houston Tax Day Flood Hurricane Harvey Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 2

21 Q4 Jobs Data Suggests Harvey Had Temporary Effect on TX Job Growth Mil. jobs, SA Baseline estimate (9/4/17) $6 billion estimate of damages (9/4/17) Extrapolated data based on actual Aug.- Jan. growth 12. SOURCES: Bureau of Labor Statistics; National Oceanic and Atmospheric Administration; authors' calculations. 21

22 Gulf Coast Job Growth Impacted Strongly By Hurricane, But Recovery Well Underway Thousands of jobs, SA 3,5 3,48 3,46 3,44 3,42 3,4 3,38 Baseline (9/4/17) $6 billion estimate of damages (9/4/17) Extrapolated data based on actual Aug.-Dec. 217 growth 3,36 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 NOTE: Gulf Coast includes the Houston, Beaumont-Port Arthur, Victoria, and Corpus Christi MSAs. SOURCES: Bureau of Labor Statistics; National Oceanic and Atmospheric Administration; authors' calculations. 22

23 Texas Mortgage Delinquencies Up in Aftermath of Hurricane Harvey Percent TX Delinquencies US Delinquencies TX Foreclosures Started US Foreclosures Started SOURCE: Mortgage Bankers Association 23

24 Texas Leading Index Components Mostly Positive Net contributions to change in the Texas Leading Index (November 217 -February 218) 2.5 Net Change in Texas Leading Index.27 Texas Value of the Dollar.67 U.S. Leading Index Real Oil Price Well Permits New Unemployment Claims Texas Stock Index -.11 Help Wanted Index.25 Average Weekly Hours NOTE: Seasonally adjusted. SOURCE: Federal Reserve Bank of Dallas. 24

25 Texas Jobs Forecasted to Grow 2.9% to 3.9% in 218 Millions, seasonally adjusted Leading Index Index, 1987= Texas nonfarm employment and forecast (with 8% confidence band) ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 ' SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; Federal Reserve Bank of Dallas. 25

26 Summary In 215 and 216, Texas weakened sharply but continued to grow - did much better than 198s and better than other energy states. In 217 energy and manufacturing sectors rebounded. Home inventories remain lean and hurricane Harvey will further boost the demand for residential building and repair. Texas grew at 2.1 percent in 217 and will likely accelerate to about 3.4 percent in 218. Biggest risk to the forecast is sharp decline in oil prices or exports. 26

27 Dallas Fed Publications Public Resources from the Dallas Fed: Southwest Economy Regional Economic Updates San Antonio and Austin Economic Indicators Texas Business Outlook Surveys Energy Survey National Economic Updates International Economic Updates Additional Research Publications and Data 27