When it comes to assessing the state of the economy, there are a number of numbers that economists look at to get a feel for how things are going.
There are some of the obvious ones like gross domestic product (GDP) and inflation that are the ones that are troubling most people right now.
But there are also a variety of other, less obvious indicators that reveal important information about the state of the economy.
Joshua Roberson is a senior data analyst at the Texas Real Estate Research Center at Texas A&M, who recently worked on a co-author of a report Look at the state of the Texas economy. He joined the Texas Standard to discuss some of his team’s results. Listen to the story above or read the transcript below.
This transcript has been edited slightly for clarity.
Texas Standard: I understand you recently co-authored a study called “Outlook for the Texas Economy.” Tell us what you wanted to achieve there. Get a rough overview of where the journey is going?
Joshua Roberson: Yeah, so we do this report every month and basically keep our eyes on what’s going on in the economy. Obviously there are a lot of changes going on right now. There’s a lot of interest in where things are going. So what we’ve been aiming for over the past month is just to take a look at what’s happened this month.
Well, let’s talk about some of the factors that you looked at. I think most people know that interest rates are high and rising. How is this affecting Texans and what’s your outlook on the interest rate front?
So the most obvious impact right now is the housing market. The real estate market was basically on fire in late 2020 and into 2021, but once interest rates started to rise, there was a noticeable difference. Much of the price growth has slowed and we are in a kind of waiting pattern as to what will happen next with interest rates. I mean, the whole goal is to control inflation. And inflation has slowed down a bit, but we’re still in an elevated state. And really, until we get that under control, it’s likely, at least according to Federal Reserve news, that rates will continue to rise. So it’s unclear what will happen to mortgage rates in the coming year. I think some of the numbers I’ve heard — that kind of 6% range maybe, or 7% range, which is still a lot higher than what it was — but over the long run, that used to be an average Interest rate a long, long time ago.
Oh yeah. I remember the 19% interest rates and all that kind of craziness. Now I want to address something else that many people would consider good news. Texas added 40,000 jobs in September, with cities like Dallas and Houston each adding more than 10,000. I said that sounds like good news, but how does this affect how you feel about a potential recession in the future?
You know, that was a pleasant surprise. I mean, again, there’s a lot of uncertainty, and it shows in the mood. At the moment there is still a lot of pessimism in the market. But for now, job growth has been pretty healthy. I think part of the concern was who will be the industry leader. Right now, throughout the pandemic, professional business services have been a huge factor in growth. It’s still growing. It’s slowed down a bit, but it’s still pretty strong.
Well, but it’s not blanket, is it? I mean, your research shows that auto dealerships laid off 1,400 workers or something over inflation concerns. We see how all this is naturally connected.
Yes, I mean there was a lot of volatility in certain sectors. Retail allowance is one. I think a lot of that just depends on what’s in the news right now, you know, on how open the economy is and how much people are going to spend. So retail is one of them. It’s been a bit of a mess for the past few years, but wholesale has been doing really well at the moment. And other sectors, I mean Texas has benefited in the sense that most major sectors have recovered from the pandemic. So, yeah, for now, that’s looking pretty good.
Well, I mean, Texas obviously has a reputation as a major energy state. I was surprised to read that the UK now receives nearly 10% of Texas’ total crude oil exports. I suspect it has to do with the war in Ukraine.
Yes, there’s definitely all the upheaval in the global oil market that has resulted in some interesting stats. Yes, as you said, Europe is absorbing more of our oil.
But good news for the Texas energy sector, I would imagine, or at least for oil and gas.
That’s good news, but there’s a lot of uncertainty again, particularly in energy markets. So it’s going to be hard to see a lot of investment going in that direction with so much uncertainty. But yes, in the short term it is good news.
You know, I’m picking up a word you use quite a bit here: “insecurity”. That brings us to a recent data report from the Bureau of Labor Statistics, which says Texas has a million job openings — or had a million job openings — at least as of September. How do you feel about such things? Would you call it a spike or a quirk or an anomaly or what?
Yes. I mean, so the vacancies are still very high. Attitude is slightly declining according to the same data set. But yeah, that’s just one of the quirks we’ve got right now. And again, with that buzzword, as much uncertainty as there is, it’s really hard to predict what’s going on.
Now, when you put all those numbers and concerns and uncertainties together, how do you feel about the prospects for Texas, at least in the short term?
That’s a great question. I mean, again, we’re kind of on hold, but if it’s anything like last time, you know, ten years ago, I mean, Texas has found its way to outperform everyone else. I mean, we have a lot of high-income people who have moved to the state. So we have a pretty robust workforce. And so maybe we’re in the same place where we, you know, maybe not growing as fast by Texas standards, but maybe outperforming a lot of the other states.
I guess it depends on your personal situation, but should people be worried? Should they be conservative about the way they use their money, follow some kind of savings principle when it comes to personal income? What advice would you give to someone who says, “Well, I see all these signals that I’m not sure how to think about”?
Yeah, I’m not sure they need me to tell them to keep an eye on it. I think they already are, really. This is also reflected in many consumer sentiment surveys. I think it will be a while before the inflation numbers come down before people’s confidence grows again.