The big thing going for Texas right now is that you have an economic dynamic that continues to sponsor growth throughout the state.
By Marc. L. Flaster
Texas Insider Report: AUSTIN Texas The banks here are very aggressive right now and are seeking out opportunities to grow" Texas Insider Economic Council Chairman Marc Flaster tells Insiders Jim Cardle.
Federal Reserve Bank Chairman Jerome Powell did not help the bond market with his interview on 60 Minutes Sunday night nor did he encourage stock investors. Reports on Retail Sales may have lifted market spirits on Monday but that does not mean the problems at many retailers are going to go away. As on-line sales continue to dominate margins are suffering and most importantly business have lost the loyalty card for repeat business. Even in the restaurant business on line sales are now 30 of their business. Delivery services are almost as important as the quality of the food. More and more people are eating at home but not cooking the meals.
On-line buyers are taking pricing decisions out of the hands of the seller. In some markets offerings are subject to negotiation to get the sale done. Housing prices are being driven by land and material costs. Buyers are limited by lenders constraints. Inventory continues to grow. Some movement out of high cost areas like Southern California to places like Nevada.
Auto sales continue weak. It is not that new cars are not tempting its that the population is seeing transportation as just a commodity and not a necessity. For many public transportation is sufficient.
So as the 1st Quarter end approaches at the end of March reports on inflation continue to dim.
That being said Texas is on a roll especially with its continued development activity. Best business climates in the nation are currently: Austin San Jose Boston Salt Lake City and Orlando Florida. Worst are: Rochester and Buffalo NY Cleveland Detroit and NYC.
Yes. NYC comes in at the end of the list. Must be the Amazon effect.
Meanwhile world business away from the U.S. continues to struggle. Many of the familiar engines of growth have or are faltering. Germany is barely reporting positive GDP Brexit is killing the United Kingdom. There is another Brexit vote tomorrow. Pressure is building to postpone a decision beyond the May 29th deadline. What the Brits hope to gain from this is beyond comprehension. Business is leaving manufacturers complain that sourcing materials has become an exercise in frustration. It appears that there must be another way to deal with the Irish separatists than this.
Japan continues to rock along at a null-point the French continue to spend more time in the streets protesting than working in the factories and Italy and Spain are not even on the charts. And the big engine in China is sputtering.
While President Trump may get a trade agreement as their leverage weakens the big area of concern is how to monitor the conformity with the agreement and what are going to be the penalties to be imposed. Mr. Trump is scheduled to meet in Miami with Chinese Leader Xi Jinping on March 27th but that date may be cancelled as it was set to confirm a trade agreement.
With Venezuela oil output almost negligible the funding support that President Trump has provided for the populist alternative to Maduro Mr. Guido is limited at best. The power blackout in Venezuela has not caused a call for demonstrations to remove Maduro either. It may be best to leave the internal politics of other nations to the people who live there. A lesson to be learned?
U.S. stocks are nervous after a temporary confidence in China talks had created some buying fever. Markets are staying put. Federal Reserve Bank Chairman spoke before the U.S. House of Representatives. Nothing new here. The Fed is on hold. Powell continues to spatter his intermittent public remarks with rate bumps. Retailers and housing markets all trend toward weaker activity.
Going forward final 4st Quarter 2018 GDP numbers are being viewed by some as suspect or are immediately to be dismissed as based on incomplete data after all the data collection was hindered by the partial government shutdown. At the moment the weather is making a larger impression than the political and economic news. Markets reflect lack of progress everywhere as some forecast 1st Quarter GDP may not be much better. Weakness persists no matter what the suspect government numbers suggest.
It may be too early to handicap the 2020 election but the lineup for this ring toss gets longer with each passing day. Now there are 14 announced Democrat hopefuls with several on the cusp. The most controversial spokesperson for the progressive left is AOC (Alexandria Ocasio-Cortez.) At 29 years of age she is ineligible to run for that office. But boy can she bring the potential voters into the hall. (See the recent news reports from the South by Southwest Conference in Austin Texas.)
The outlook from this observer suggests that the economy is transitioning. Forecasters have begun to take back their call projecting a possible downturn but also do not see a break-out for growth. Lots of politicking both domestically and abroad will roil markets but the underlying trend is NOT up on interest rates.
Marc L. Flaster is chairman of the Texas Insider Economic Council.
