The Explainer: Flaster Breaks Down What Texans Need To Know (Economically)

The thing thats most important in all of this is that at the political level elected officials are still running their economies and their cities as if they Texaswere still receiving the kind of tax revenues that they were before. Texas Insider Report: AUSTIN Texas  Whats going on right now economically is that first right now the Federal Reserve wants to see some inflation. They say if they see some inflation therell be an opportunity to raise prices if they can raise prices then therell be an opportunity to pay people more and if they can pay people more therell be more money to spend. So lets take that apart. Secondly there is no inflation. None. Its not hiding under the table its not in my pocket. It does not exist and there wont be any inflation again maybe in my lifetime. Possibly even yours Sandler ONeill Partners Marc Flaster tells Insiders Jim Cardle. TexasAnd the thing thats most important in all of this is that at the political level nationally and especially in Texas elected officials are still running their economies and their cities as if they were still receiving the kind of tax revenues that they were before said Flaster.

Wall Street Analyst & Texas Banking Industry Advisor Marc Flaster knows what hes talking about … and whats driving the Texas & U.S. politically prior to November 4ths Election.      

Now whats going to happen from here is that companies are going to be faced with higher costs especially those within the services industry and they are going to turn around and say I cant afford to pay people more given my margins and therefore Ill have to get rid of some people and cut back on how many people we employ. That means we have fewer people employed.

What that leads to is that for families in Houston or other cities across Texas theyre going to start looking at each other saying Honey weve got to cut back. And next thing you know the boat goes then the pool guy goes the landscaper goes the kids get yanked out of private school the wifes now worried so she stops spending and this whole thing trickles down Flaster said.

Then you go and look at the companies that say Well if I have to pay these minimum wage people more I have (the other) key people I really have to retain but the people that are key to my business are going to look at the spread between what theyre making and the ones Im now paying $15.00 an hour and theyre going to say Youve gotta pay me more too. So now the costs in the important parts of my company have gone up the costs in the unimportant parts of my company have gone up and Im going to look around and say I have to charge more. But realistically because of competition they cant Flaster said.
The difference between how this is playing out in Texas compared to the rest of the country is that its being played out over a longer period of time. In Houston the growth in employment although people are still moving in its not at as fast of a rate as it was before but Houston will grow this year maybe at a rate of 1. Housing prices have already come down... double or triple bids used to be the case. Maybe now you get one bit or no bids at all. Alot of the smaller and larger retails stores are starting to have difficulty added Flaster.
HoustonSkylineSMALLYou can read theres a lot of new restaurants opening up on page 5 but then on page 7 you see all the restaurants that have closed. The government (Federal Reserve) is trying to create inflation because they think that if you can create inflation itll have a benefit to our economy such as I just mentioned. So (thats why) theres been a big movement in the country to raise the minimum wage nationwide Flaster said.
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