Texas Comptroller Glen Hegar announced this week that Texas experienced its 14th consecutive month of job growth in August. Here are some numbers on the state of the Texas economy:
- Employment rose by 2.5 percent for the year ending in August, more than double the rate from 2016.
- Texas’ employment growth ranked first among states in year-over-year net change (+298,600) and fifth in percentage change (2.5 percent).
- The trade, transportation and utilities category saw the biggest expansion, with 9,100 jobs gained from July to August;
- Construction (2,600) and manufacturing (2,200) were second and third, respectively.
- The latter’s 4.2 percent annual job growth rate was its largest year-over-year increase since March 2012.
- The Federal Reserve Bank of Dallas noted recently that Texas’ second-quarter job growth rate was the state’s fastest since 2014
Of course these numbers don’t fully account for the effects of Hurricane Harvey; I’ve seen loss estimates of anywhere from $70-190B dollars in economic losses. As much as 31 percent of total U.S. refining capacity — much of it in Houston — was either been taken offline or reduced dramatically because of Harvey, according to CNBC.
Railroad Commissioner Ryan Sitton, though, says that while some refineries did shut down or operated at reduced capacity due to flooding, our energy infrastructure is recovering quickly; most refineries have now come back online and more than 40,000 Texas men and women are headed back to work.
On the state budget front.. unless oil prices rebound dramatically the next fiscal year state budget (2019-2020) is going to look a lot like the current one; that is, very tight. Particularly given the increasing pressure that Medicaid is applying to state spending.
The Texas business community and our elected leaders will need to be engaged on that subject and even get creative when it comes to economic development – whether its creating a vibrant domestic venture industry here in Texas or landing major deals like the 2nd Amazon HQ’s; their decision is expected in 1st Q of 2018.
On the subject of Harvey, Governor Greg Abbott has said the the state won’t tap into the Rainy Day Fund to help with Hurricane Harvey recovery efforts until the next legislative session—if it uses any of the $10 billion at all. Houston is expected to tap so-called “Tax Increment Reinvestment Zones” to cover costs.
The state has already given $100 million to Houston to help clean up debris.
None of this is slowing down Texas growth in the near term. In recent months Governor Abbott has announced major projects with companies like Charles Schwab, Pei-Wei, McKesson, Formosa Plastics, and Boeing.
And one federal note with potential impact on Texas .. Tax reform proposals being considered by Congress could be a tremendous boon to Texas and the U.S. economy.
Companies who have stockpiled cash overseas could bring that money home and pay a one-time ten percent (10%) tax on that money instead of the 35% corporate rate that would otherwise apply.
The repatriated money could be used on share buybacks, dividends, acquisitions, or capital spending.
Companies with a significant Texas presence would be affected – Apple, Caterpillar, Google, and Oracle have significant cash holdings overseas that could be liberated and spent here at home.
And finally.. most new state laws went into effect on September 1. If you need information, be in touch.