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Economic Success in Texas:

Economic Success in Texas Ivan DeLeon Brandman University


Synopsis Texas’ success compared to other states Rate of Success & Employment Opportunities Contributing Factors to Texas’ economic health Economic Projection Resources


Success June 21, 2011 – Texas became second-largest economy in the US. California placed first. New York placed third. Success due to state’s production and focus on raw materials, government and senior citizens Similar economic growth in California (1980) and Texas (1970)

Slide 4:

GDP data, according to USA TODAY reflects income increases and population growth. Measures the economic weight of each state. Texas and others (green) have gained economic points. California (orange) and others have remained stagnant or lost points. Economic point gain late 2000-early 2011

Other States: Success & Failures:

Other States: Success & Failures California $1.9 trillion economy remains the largest since its peak in 1990, but decreased during 2000-2010 due to housing downturn Virginia remained closely successful with government aid in suburb areas Michigan and Ohio shrank and remained stagnant through the decade because of “20 th Century middle-class jobs (factory workers) USA TODAY

Texas Employment:

Texas Employment Employment increased by 29,300 jobs between July 2010 – July 2011. Jobs include Trade Transportation, Educational and Health Services, Manufacturing Mining and Logging

Factors of Success:

Factors of Success Theoretically – Texas Governor Rick Perry credits himself for Texas’ success Adopted philosophies small-government and low-regulation Business friendly policies Reality - Economists claim other factors may have contributed 10 Contributing Factors

10 Major Factors:

10 Major Factors Rising Oil Prices Government Growth Military Spending No Housing Bubbles Cheap Immigrant Labor Young Consumer-Oriented Population High-Tech Industries Hydraulic Fracturing Texas Exports Drug Trafficking

Slide 9:

Rising Oil Prices January 2008 - $92.97 per barrel June 2011 - $96.26 per barrel Oil prices rising, job growth relatively higher 10 point increase in oil prices = 0.3 percent rise in employment and 0.5 percent rise in state GDP

Slide 10:

Government Growth “Creation of government jobs help to create jobs in the rest of the economy, because people spend money and buy things,” – Howard Wial , Economist Texas’ bi-annual budgeting prevented cutbacks on government spending, unlike other states. Jobs are protected in the midst of recession fallout

Slide 11:

Military Spending Government expanded since 9/11 Major Bases: Fort Bliss and Fort Hood Since 2007, nearly 14,000 Army troops relocated to Fort Bliss/Hood Expanding military bases create jobs Fort Hood is the largest single site employer in Texas. $3 billion annually

Slide 12:

Housing Bubble Texas avoided foreclosure bust, which crippled other states. Only 6 percent of Texas mortgage borrowers suffered near foreclosure. National average was 10 percent Housing prices never rose during the housing boom, partly because Texas has cheap, open land for building Housing market didn’t crash during the recession State regulations on cash-out and home equity loans don’t allow borrowers to take out loans totaling more than 80 percent of a home’s appraised value

Slide 13:

Cheap Immigrant Labor Texas population increased in the last decade by 4 million Hispanic minorities account for 65 percent of population increase Immigrants are mostly from Mexico or Latin American countries Work low-wage jobs, keeping averages throughout the state down Cheap labor is readily available for immigrants. Employers looking for low-wage employees usually locate in Texas

Slide 14:

Young Consumer-Oriented Population Median age is 33, four years below national average Texas has one of the youngest populations in the country Consumption-driven economy Young tend to spend more than most Americans

Slide 15:

High-Tech Industries During economic recovery, a greater demand for high-tech industries and production Texas Instruments one of the leading contributors since the recession Consumer demand for technology increased

Slide 16:

Hydraulic Fracturing Oil engineers combined methods for hydraulic fracturing, or “ Fracking ” Method for mining natural gas pockets and minerals (shale) In 2000, 1 percent of US gas supplies came from shale As of 2011, 25 percent of gas supplies comes from shale Texas most prosperous in shale deposits

Slide 17:

Texas Exports Texas experienced an inflow of foreign capital since the recession Exports include natural resources, technology and food products from large farming communities 12 percent of US resources come from Texas

Slide 18:

Drug Trafficking At least half of drug shipments coming from Mexico and other Latin American countries are stopped and offloaded in Texas. The significant half of the money that comes from drug trade has to come through Texas which raises the consumption and investment in the state from drug dealers in other states.

Outlook & Summary:

Outlook & Summary Projected increase in GDP up 3.7 percent this year Progress trends may continue if Texas holds on its own for the next decade However, labor market might begin to lag behind if growth continues Creating just 1.3 million new jobs in the last 12 months. Unemployment rate has fallen to 8.8 percent from 9.8 percent over the past four month



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