Once a separate nation Texas has recently been behaving more like an independent economic republic than a regular state. While it hasnt been immune to the problems plaguing the nation the Texas housing market employment rate and overall economic growth are relatively strong.
Chalk some of this up to accidents of geology and geography. But Texan prosperity also reflects the conscious efforts of a once-parochial place to embrace globalization.
On several measures of economic stress Texas is doing quite well. The state unemployment rate is 8.2 percenthigh but still one many states would envy. (Californias is 12.5 percent; Michigans is 14.1 percent.) It entered recession later than the rest of the countryTexas was adding jobs through August 2008and started slowly adding jobs again last fall thanks mostly to its great position in the largely recession-proof energy industry.
The Texas housing market also has fared better than many. The mortgage delinquency rate (the portion of borrowers three months behind on payments) is 5.78 percent compared with 8.78 nationwide according to First American CoreLogic. Thats partly because relaxed zoning codes and abundant land kept both price appreciation and speculation down.
House prices didnt experience a bubble in the same way as the rest of the nation said Anil Kumar senior economist at the Federal Reserve Bank of Dallas. But its also because of two attributes not commonly associated with the Longhorn State: financial restraint and comparatively strong regulation.
Unlike many of its neighbors Texas has state laws that prohibited consumers from using home-equity lines of credit to increase borrowing to more than 80 percent of the value of their homes. The upshot: Dallas housing prices have fallen only 7 percent from their 2007 peak according to the Case-Shiller index.
As it has for decades energy is driving Texas economy. But its not because the states wells are gushing crude. In November 2009 Texas wells produced 1.08 million barrels per day about half as much as they did in the late 1980s. In recent years natural gas has been undergoing a renaissance. The states production rose about 35 percent between 2004 and 2008. And Texas has received a big boost from a different renewable source of energy: wind.
In this area Texas size and history of independence has enabled it to jump-start a new industry. The state has its own electricity grid which is not connected to neighboring states. That has allowed it to move swiftly and decisively in deregulating power markets building new transmission lines and pursuing alternative sources.
We can build transmission lines without federal jurisdiction and without consulting other states said Paul Sadler executive director of the Austin-based Wind Coalition. Ramping up wind power nationally would require connecting energy fieldsthe windswept sparsely populated plainsto population centers on the coasts and in the Midwest.
Texas grid already connects the plains of West Texas with consumers in Dallas Austin San Antonio and Houston. Texas recently surpassed 10000 megawatts of capacity the most by far of any state and enough to power 3 million homes Sadler says. Wind energy is also powering employmentcreating more than 10000 jobs so far. And it and has attracted foreign companies including Danish turbine maker Vestas Spanish renewable-energy giant Iberdrola and Shell.
Texas today is more suburban engineer than urban cowboy more Michael Dell than J.R. Ewing. Austin home to the University of Texas the state government and Dell Computer has a 7 percent unemployment rate. Yes ExxonMobil is based in Irving.* But the states energy complex is increasingly focused more on services and technology than on intuition and wildcatting.
And it is selling those services into the global oil patch. Russian Persian Gulf and African oil developers now come to Houston for equipment engineering and software.
While its political leaders may occasionally flirt with secession Texas thrives on connection. It surpassed California several years ago as the nations largest exporting state. Manufactured goods like electronics chemicals and machinery account for a bigger chunk of Texas exports than petroleum does. In the first two months of 2010 exports of stuff made in Texas rose 24.3 percent to $29 billion from 2009.
Thats about 10 percent of the nations total exports. There are more than 700000 Texan jobs geared to manufacturing goods for export according to Patrick Jankowski vice president of research at the Greater Houston Partnership. A lot of it is capital goods that the Asian Latin American and African countries are using to build their economies.
Thanks to that embrace of globalization the Texas turnaround may help lead the nation in its economic turnaround. Texans have always had the ability to think big. Now that their state has become a player in the global economy we can expect a new kind of swagger.
Once a separate nation Texas has recently been behaving more like an independent economic republic than a regular state. While it hasnt been immune to the problems plaguing the nation the Texas housing market employment rate and overall economic growth are relatively strong.
Chalk some of this up to accidents of geology and geography. But Texan prosperity also reflects the conscious efforts of a once-parochial place to embrace globalization.
On several measures of economic stress Texas is doing quite well. The state unemployment rate is 8.2 percenthigh but still one many states would envy. (Californias is 12.5 percent; Michigans is 14.1 percent.) It entered recession later than the rest of the countryTexas was adding jobs through August 2008and started slowly adding jobs again last fall thanks mostly to its great position in the largely recession-proof energy industry.
The Texas housing market also has fared better than many. The mortgage delinquency rate (the portion of borrowers three months behind on payments) is 5.78 percent compared with 8.78 nationwide according to First American CoreLogic. Thats partly because relaxed zoning codes and abundant land kept both price appreciation and speculation down.
House prices didnt experience a bubble in the same way as the rest of the nation said Anil Kumar senior economist at the Federal Reserve Bank of Dallas. But its also because of two attributes not commonly associated with the Longhorn State: financial restraint and comparatively strong regulation.
Unlike many of its neighbors Texas has state laws that prohibited consumers from using home-equity lines of credit to increase borrowing to more than 80 percent of the value of their homes. The upshot: Dallas housing prices have fallen only 7 percent from their 2007 peak according to the Case-Shiller index.
As it has for decades energy is driving Texas economy. But its not because the states wells are gushing crude. In November 2009 Texas wells produced 1.08 million barrels per day about half as much as they did in the late 1980s. In recent years natural gas has been undergoing a renaissance. The states production rose about 35 percent between 2004 and 2008. And Texas has received a big boost from a different renewable source of energy: wind.
In this area Texas size and history of independence has enabled it to jump-start a new industry. The state has its own electricity grid which is not connected to neighboring states. That has allowed it to move swiftly and decisively in deregulating power markets building new transmission lines and pursuing alternative sources.
We can build transmission lines without federal jurisdiction and without consulting other states said Paul Sadler executive director of the Austin-based Wind Coalition. Ramping up wind power nationally would require connecting energy fieldsthe windswept sparsely populated plainsto population centers on the coasts and in the Midwest.
Texas grid already connects the plains of West Texas with consumers in Dallas Austin San Antonio and Houston. Texas recently surpassed 10000 megawatts of capacity the most by far of any state and enough to power 3 million homes Sadler says. Wind energy is also powering employmentcreating more than 10000 jobs so far. And it and has attracted foreign companies including Danish turbine maker Vestas Spanish renewable-energy giant Iberdrola and Shell.
Texas today is more suburban engineer than urban cowboy more Michael Dell than J.R. Ewing. Austin home to the University of Texas the state government and Dell Computer has a 7 percent unemployment rate. Yes ExxonMobil is based in Irving.* But the states energy complex is increasingly focused more on services and technology than on intuition and wildcatting.
And it is selling those services into the global oil patch. Russian Persian Gulf and African oil developers now come to Houston for equipment engineering and software.
While its political leaders may occasionally flirt with secession Texas thrives on connection. It surpassed California several years ago as the nations largest exporting state. Manufactured goods like electronics chemicals and machinery account for a bigger chunk of Texas exports than petroleum does. In the first two months of 2010 exports of stuff made in Texas rose 24.3 percent to $29 billion from 2009.
Thats about 10 percent of the nations total exports. There are more than 700000 Texan jobs geared to manufacturing goods for export according to Patrick Jankowski vice president of research at the Greater Houston Partnership. A lot of it is capital goods that the Asian Latin American and African countries are using to build their economies.
Thanks to that embrace of globalization the Texas turnaround may help lead the nation in its economic turnaround. Texans have always had the ability to think big. Now that their state has become a player in the global economy we can expect a new kind of swagger.
