When it comes to evaluating the health of the economy, economists look at a number of numbers to see how things are going.
There are some obvious factors such as gross domestic product (GDP) and inflation that most people are under pressure right now.
But there are many other, less obvious indicators that reveal important information about the state of the economy.
Joshua Roberson is a Principal Data Analyst for the Texas Real Estate Research Center at Texas A&M. report looking at the state of the Texas economy. He joined the Texas Standard to talk about some of his team’s findings. Listen to the story above or read the transcript below.
This transcript has been lightly edited for clarity.
Texas Standard: I understand that you recently co-authored a study called The Texas Economic Outlook. Tell us what you were trying to achieve there. Do you get a general idea of where we are going?
Joshua Roberson: Yes, that’s why we release this report every month and basically follow what’s happening in the economy. Obviously there are a lot of changes going on right now. There is a lot of interest in where things will go. So, last month we were trying to just look at what’s been going on this month.
Well, let’s talk about some of the factors you’ve considered. I think there is one thing that most people know is that interest rates are high and they are going up. How is this affecting Texans and what is your interest rate outlook?
So right now, the most obvious influence is the housing market. The housing market was basically on fire at the end of 2020 and into 2021, but when interest rates started to rise, the difference became noticeable. Price growth has largely slowed down and we are on hold in terms of what will happen next with interest rates. I mean the whole purpose is to control inflation. And inflation has slowed down somewhat, but we are still in an elevated state. And indeed, until we get this under control, it is likely, at least according to reports from the Federal Reserve, that rates will continue to rise. So one can only guess what will happen to mortgage rates in the coming year. I think some of the numbers I’ve heard are maybe the 6% range or the 7% range, which is still a lot higher than it was – but in the long run it was an average. interest rate for a long time.
Oh yes. I remember interest rates of 19% and all that craziness. Now I want to look at something else that many people would consider good news. Texas added 40,000 jobs in September, and cities like Dallas and Houston added more than 10,000 each. I said that sounds like good news, but how does this affect how you think about the possible future of a recession?
You know, it was a pleasant surprise. I mean, again, there’s a lot of uncertainty and that shows up in sentiment. There is still a lot of pessimism in the market right now. But for now, job growth has been pretty healthy. I think part of the worry was who would be the industry leader. Right now, during the pandemic, professional business services have been an important growth driver. It’s still growing. It’s slowed down a bit, but still works quite well.
Well, but it’s not universal, is it? I mean, your research shows that car dealerships laid off 1,400 workers or something because of concerns about inflation. We see how this is all interconnected, obviously.
Yes, I mean there was a lot of volatility in some sectors. Retail payment is one of them. I think a lot of it is just some news at the time, you know, depending on how open the economy is and how much people are going to spend. So retail is one of them. It has been ubiquitous for the last few years, but now wholesale is doing very well. And other sectors, I mean, Texas has benefited in the sense that most of the major sectors have recovered from the pandemic. So yeah, it looks good for now.
Well, I mean, obviously Texas has a reputation for being a major energy state. I was surprised to read that the UK now receives nearly 10% of Texas’ total crude oil exports. I assume it has to do with the war in Ukraine.
Yes, there are definitely turmoils in the global oil market that have led to some interesting statistics. Yes, like you said, Europe is absorbing more of our oil.
But good news for the energy sector in Texas, I think, or at least for the oil and gas sector.
This is good news, but again, there is a lot of uncertainty, especially in the energy markets. So it will be hard to see how much investment is going in that direction with so much uncertainty. But yes, in the short term, this is good news.
You know, I catch a word that you use here quite a lot: “uncertainty.” Which brings us to a recent report from the Bureau of Labor Statistics that says there are a million jobs in Texas – or there were a million jobs – at least in September. What do you think about such things? Would you call it a spike, a quirk, an anomaly or what?
Yeah. I mean, so there are still a lot of vacancies. According to the same dataset, hiring has dropped slightly. But yeah, that’s just one of the quirks we have right now. And again, there’s so much ambiguity with this buzzword that it’s really hard to predict what’s going on.
Well, when you put all these numbers, fears, and uncertainties together, what do you think about the prospects for Texas, at least in the near future?
This is a great question. I mean, again, we’re sort of on standby, but if this is anything like the last time it was ten years ago, I mean Texas has found a way to outdo everyone else. I mean, we did have a lot of high income people moving into the state. So we have a pretty strong workforce. And so we might end up in the same place where, you know, we’re not growing as fast by Texas standards, but we’re probably outperforming many other states.
I guess it depends on your personal situation, but should people be concerned? Should they be conservative in terms of how they use their money, have some kind of savings approach when it comes to personal income? What advice would you give to someone who says, “Well, I see all these signals when I don’t know how to think about it”?
Yeah, I’m not sure what they need me to tell them to keep an eye on it. I think they already have, really. Again, this shows up in many consumer sentiment surveys. Until the inflation rate comes down, I think it will take some time for people’s confidence to feel strong again.