By: Luis Torres, Wesley Miller, and Bailey Cuadra (Texas A&M University Real Estate Center)
A strong U.S. economy and stable energy prices supported growth in the Texas economy. The state accounted for 39 percent of national crude oil production and 84 percent of its exports. The employment expansion extended its 20-month streak, adding more than 70,000 jobs this year alone. Economic opportunities continued to attract both international and domestic migration to Texas. Population growth is essential to expand the talent pool and tax base, but it increases pressure on the local infrastructure and already constrained housing market. Decreased housing affordability, energy price volatility, and trade uncertainty remained the greatest headwinds to the Texas economy.
The Texas economy advanced as the Dallas Fed's Business-Cycle Index (a measure of current economic activity in the state) posted 5.2 percent quarterly annualized growth. The metropolitan business cycle indices were positive across the Texas Urban Triangle, led by Austin at 8.5 percent. Dallas and San Antonio maintained moderate growth at 3.6 and 3.7 percent, respectively. Stagnant wages decelerated the Houston index for the second straight month to 5.9 percent, below its post-Harvey peak of 7.8 percent in December. In contrast, recent wage growth pushed the Fort Worth index above 3 percent after slacking the past three months.
The Texas Leading Economic Index (a measure of future directional changes in the business cycle) balanced around a two-year high amid fewer initial unemployment insurance claims, gains in the U.S. leading index, and declines in the Texas value of the dollar (a weight on Texas export competitiveness). Optimism regarding recent tax cuts and employment opportunities pushed the Texas Consumer Confidence Index up two points, reaching a record high.
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