12.05.08
US economic woes finally “trickling down” to Texas economy,politicians consciousness
Up until this week it wasn’t apparent that our statewide elected officials were aware that the sinking US economy might have much impact on the Texas economy. That no longer appears to be the case, Federal Reserve Chairman Ben Bernake’s visit probably had much to do with the change. This article from Thursday’s AAS, Estimating state revenue will be ‘nightmare’ in this economy, makes it apparent that the Dallas Fed left no doubt.
The Texas economy, which had been avoiding the national tumult, has now joined the rest of the country in feeling the effects of the financial crisis and the crisis of confidence that followed, said Keith Phillips, a senior economist with the Federal Reserve Bank of Dallas.
On Wednesday, the Dallas Fed released a survey of businesses, mostly from Texas, that showed broad-based weakening in October and November with declining production, sharp cuts in manufacturing jobs and strong demand for bankruptcy and litigation services.
The business outlook for the near-term is gloomy and deteriorating, Phillips said, with improvement not expected for four months to a year.
This manufacturing report from the Dallas Fed on November 24th is not promising:
Texas manufacturing activity deteriorated further in November, according to business executives responding to the Texas Manufacturing Outlook Survey. Most indicators of current factory activity plunged. Several indexes for future production fell to their lowest levels since the survey started in June 2004, suggesting respondents expect continued deterioration in manufacturing activity over the next six months.
Concerns about economic and financial conditions weakened current factory activity. The general business activity index revealed overwhelmingly negative sentiment, with 64 percent of respondents reporting worsening conditions. The company outlook index remained negative for the sixth consecutive month.
Indexes for production, capacity utilization, volume of shipments, unfilled orders and delivery time slid further into negative territory. The volume of new orders index plummeted to a record low, and over half of the executives reported decreases in the growth rate of new orders.
Not good to see words like “plunged” and “plummeted” used when discussing manufacturing. All that being said Texas is in a relatively good position with regard to many other states, but that $15 billion surplus Speaker Tom Craddick touted in May is at least down to $11.7 billion and more than likely non-existent. Just like Gov. Rick Perry’s dream of tax rebates. It’s also time for everyone to understand the difference between a “bail out” and an economic stimulus package that will be used to pay for infrastructure, etc.. to create jobs, (see manufacturing report above), in all states and get the US economy moving again. While Perry doesn’t quite yet get it, State Sen. Steve Ogden appears to:
State Senate Finance Committee Chairman Steve Ogden, R-Bryan, said the upcoming state budget will be tight but Texas does not need a handout from the federal government to pay its bills.
“We’re not in such bad shape that the federal government needs to borrow money to help us out,” Ogden said. “I am terrified of this federal deficit. To the best of my ability, I don’t want to contribute to making it worse.”
Ogden said he would not, however, object to the federal government borrowing money to pay for infrastructure, such as roads and bridges, because that kind of investment can stimulate the economy and create economic growth.
No matter how the budget is sliced and diced in the spring, it’s doing to be a dicey situation. Today the current Speaker and Lt. Gov. Dewhurst have promised an additional $2 billion to public education. And there are many other priorities as well - Hurricane Ike clean up, health care, roads, higher education, and on and on and on.