Jobs at last!!!
Although the daily headlines may reflect such matters as the oil spill in the Gulf of Mexico or the World Cup taking place in South Africa, there is one topic that is rarely off the interest radar for most Americans. That subject matter, of course, is employment.
The level of concern about jobs has risen substantially since the recession began in December 2007. Over the past couple of years, it seems that almost every news cycle brought the topic closer and closer to home as Texans, as well as people across America, heard about layoffs, business closings, foreclosures, rising unemployment, and belt tightening due to worsening economic conditions.
Within a year after the word “recession” had entered our daily conversations, the number of unemployed had climbed from 7.7 million to approximately 11.1 million and the nation’s unemployment rate had risen from 5.0% to 7.2%. By December 2009, the number of people without jobs had grown to some 15 million while the unemployment rate hovered around 10.0%.
Over the past five months, the economic skies have brightened, though there are still shadowy clouds on the horizon. In May, according to the Bureau of Labor Statistics, about 431,000 workers were added to the nation’s wage and salary payrolls, reflecting the fifth consecutive month of job growth. Unemployment was at 9.7%, the same rate as the first three months of the year. Unfortunately, much of that growth was in temporary Census workers, but the national employment picture has improved some in recent months.
For the Lone Star State, the employment data released this past week was even more pleasant. Throughout the recession, Texas has fared somewhat better than many areas and the 43,600 jobs added in May, the fifth consecutive month of positive growth, indicates that this pattern is continuing.
In January, Texas was cited by the Department of Labor as the state with the largest growth in private sector jobs among all states for the previous decade. From December 1999 to December 2009, about 724,300 net private sector jobs were created, a 9.30% overall gain. During this same period, the US experienced a 1.41% private employment loss.
The substantial job hike in May gave Texas the largest over-the-month increase in wage and salary employment among all states. California, New York, Florida, and Virginia followed with the number of added workers varying from 28,300 to 20,300. Thirty-six other states also experienced positive job growth in May.
Preliminary data just provided by the Bureau of Labor Statistics indicate that in the past 12 months, several Texas industries achieved positive net employment gain. They include professional and business services, education and health services, leisure and hospitality, and government. In fact, this is the first year-over-year gain in quite some time.
Last month in Texas, jobs were added in nine major industries with professional and business services achieving a fifth straight job gain. Other notable increases in workers were realized by leisure and hospitality and trade, transportation, and utilities industries. This broad expansion is in sharp contrast to the US and its reliance on short-term federal positions.
With approximately 11.2 million Texans currently employed, the most in the history of the state, the unemployment rate remained at 8.3% last month, well below the nation’s 9.7% status. Other state unemployment rates for May ranged from 3.6% (North Dakota) to 14.0% (Nevada). Eight states had unemployment rates significantly higher than the nation as a whole.
Since the beginning of 2010, about 114,100 new jobs have been created across the Lone Star State. Such ongoing employment growth is certainly good news for Texas and likely marks the onset of ongoing expansion at a reasonable pace for the foreseeable future.
posted @ 08:05 AM CST [link]
Friday, June 18, 2010
Rising from the Ashes
Sometimes it really is darkest before the dawn!! Such was the case with the recent announcement that the Big 12 will continue to exist (though possibly with only 10 universities) and likely even prosper more than in the past despite a flurry of activity and numerous pronouncements of its demise.
The positive economic effects of college athletics stem from ticket sales and visitor spending as well as hosting games. Schools in premier conferences also realize notable benefits such as national exposure and lucrative media contracts.
In recent days, predictions of the death of the Big 12 conference were rampant, and funeral plans were reluctantly being considered. Fortunately, thanks to the leadership and personal involvement of state legislators, university administrators, regents, coaches, donors, friends, and alumni from numerous institutions, as well as league officials, such arrangements are no longer necessary.
Although full details have yet to be finalized, it appears that the new 10-team Big 12 alignment will prove financially beneficial to all participants and significantly enhance the economy of the State of Texas. It will be a couple of seasons before the conference gets its fresh look, but when it does, the $11.58 million each school is expected to receive for the 2009-2010 academic year from TV revenue will be eclipsed by the projected $17 million Big 12 participants will be awarded beginning in 2012. In addition to that amount, each university is allowed to set up its own TV network to reap even greater financial remuneration.
College sporting events bring millions of people together every year to watch and support their teams. In the case of the Big 12, with four of its 10 members in Texas (University of Texas at Austin, Texas A&M, Texas Tech, and Baylor), the impact on local and state economies of home games is quite substantial, especially in the travel, hospitality, and restaurant sectors.
Besides season games, major games such as bowl games or basketball’s Sweet Sixteen or Elite Eight produce notable local economic stimulus and major television exposure for participating schools. A greater number of Texas teams participating in any conference preserves high-impact, in-state rivalries and will give Texas a better chance of hosting large sporting events which lead to tens of millions of dollars in economic impact. Under almost any scenario that was being contemplated, Texas would have lost (1) at least one representative in a major conference (and the corresponding revenues), (2) several high-profile games within the state, and (3) prospects for post-season events.
Keeping the Big 12 alive will enable member schools to still reap significant benefits from television exposure throughout the year in terms of recognition, prestige, student recruitment, and funds available for athletic programs. In addition to benefits to university athletic budgets, participation in premier NCAA Football Bowl Subdivision (FBC) conferences, of which the Big 12 plays a major role, furthers the reputation and academic competitiveness of participating schools.
Member schools of athletic conferences often collaborate in myriad academic ventures through voluntary consortiums. Faculty and student association with other Big 12 members seriously enrich opportunities to build broad communities, share knowledge and resources, and positively impact educational and research ambitions of all universities involved.
It is fortunate that the Big 12 will continue, especially for the remaining schools and for the Texas economy. My firm looked at the potential net annual losses to Texas if what was deemed the most likely scenario at one point in the process had indeed occurred. We found substantial negative effects as the balance shifted adversely for Texas representation relative to other states and programs were relegated to less prestigious status. In fact, we estimated that Texas could lose $714 million in annual total spending in the economy, nearly $372 million in annual output (gross product), and 5,764 full-time equivalent jobs. In addition, the State government would lose more than $19 million in tax revenue each year associated with this foregone economic activity.
While there is still some uncertainty as to the exact structure of the Big 12 going forward, it is clear that the presence of four schools in a premier conference is important to Texas’ ability to capitalize on the potential economic stimulus of college athletics and to reap other benefits as well. I like it when a plan comes together, even at the last minute.
posted @ 08:01 AM CST [link]
Friday, June 11, 2010
Texas Trade
In a few days, Governor Perry and a delegation of state and business leaders are scheduled to travel to China to represent the state at the Shanghai World Expo 2010. The purpose of the trip is to learn more about economic prospects with the world’s most populated nation and to share information concerning tourist and business opportunities available in the Lone Star State.
This trip comes on the heels of a visit by some 200 officials who the US government sent to Beijing last month for dialogue on strategic issues. Led by Secretary of State Hillary Rodham Clinton, this group received promises from Chinese leaders to continue looking at ways the US and China could cooperate in future business matters.
China is among America’s largest trading partners, with exports exceeding $70 billion a year, and local sales by US firms with operations in that country average nearly $50 billion annually. China also accounts for about 45.3% of the United States’ worldwide trade deficit.
Texas has been the nation’s top exporter since 2002, when it surpassed perennial leader California. Over the past eight years, the export gap between the Lone Star State and the Golden State has been steadily widening (although there are measurement issues involved).
In 2009, 210 countries around the world purchased Texas products to the tune of $163.05 billion. Exports to China from Texas last year totaled nearly $8.91 billion. Only exports from California ($9.74 billion) and Washington ($9.11 billion) to China totaled more. In the first quarter of this year, merchandise sold to China by Lone Star State businesses was up more than $939.61 million over the 2009 January-March timeframe.
Globally, Texas’s leading manufactured export category in 2009 was computers and electronic products, which was responsible for about 19.7% of the state’s total shipments. Chemical manufactures was second (19.0%), followed by machinery manufactures (14.6%), petroleum and coal products (13.1%), and transportation equipment (8.8%).
Of the 31 categories of merchandise Texas exports to China, the top five include chemical manufactures, computers and electronic products, machinery manufactures, crop production, and scrap materials. Chemical manufactures account for more than 40.2%. Approximately 16.8% of the state’s exports to China are computers and electronic products and machinery manufactures accounting for 10.3%. California’s major shipments to China are computers and electronic products (30.2%), and Washington’s top export is transportation equipment (45.1%).
Although China is the third-largest importer of Texas merchandise behind NAFTA partners Mexico and Canada, its percentage share has escalated dramatically since becoming a member of the World Trade Organization in 2001. Comparing 2001 with 2009, Texas exports to China increased 465.1% while shipments to Mexico and Canada for those two years expanded approximately 35.0% and 30.0%, respectively.
As a result of recession-induced difficulties, Texas’ overall trade experienced a significant drop from 2008 to 2009 ($29.18 billion). Mexico and Canada together accounted for nearly $11.65 billion of that amount, but trade with China saw a $486.09 million upswing.
More than 23,700 Texas companies are involved in export activities, with about 92% of them having fewer than 500 workers. Some 8.2% of all wage and salary employment across the state is directly linked to manufactured exports, and over 25% of those with jobs in the manufacturing sector are dependent on international trade activities for their livelihood. The multiplier effects are even higher.
To strengthen its overall economy, Texas must continue to take advantage of all opportunities to expand and enhance international trade. The Chinese population of 1.33 billion certainly offers unique possibilities toward that goal.
posted @ 08:11 AM CST [link]
Friday, June 4, 2010
Mammoth Disaster
Over the past six weeks or so, even amidst the notable difficulties and challenges experienced by corporations, currencies, and countries, never far from the headlines has been the news of the massive oil spill in the Gulf of Mexico which began on April 20.
Although the overall economic cost is still being tallied, and will continue for several more weeks, there is a consensus among oil executives and government authorities that the Deepwater Horizon oil spill (also called the BP oil spill because the rig was operated by British Petroleum) is by far the worse oil-related disaster in the history of our nation. The release of oil into the Gulf of Mexico has already well surpassed the amount leaked from the Exxon Valdez oil tanker when it ran aground in 1989.
The exact amount of oil gushing from the broken well a mile beneath the waters of the Gulf is not known, but estimates range from less than 1 million to approximately 2.5 million gallons per day. (Government estimates at the beginning of this week place the totals between 19.7 million and 43 million gallons thus far.) Whatever the actual amount of oil rising to the surface is, the oil slick it has currently produced is larger in size than the state of South Carolina.
British Petroleum announced last week that more than $930 million had been spent in clean-up activities and, by now, the total is undoubtedly approaching at least $1 billion. While that amount is certainly large, it equals only about 5% of BP’s annual profits. Even so, by the time all is said and done and BP has dealt with the countless lawsuits likely to be filed, the overall impact on the company stands to be much larger. In fact, the specter of a bankruptcy has been raised in some articles, though this seems unlikely provided the firm gets the well contained.
The entire offshore oil and gas exploration industry cluster is also suffering. The government prohibition of exploratory offshore oil drilling for the next six months has effectively idled 33 deepwater exploratory rigs and is preventing the issuance of new permits in water depths more than 500 feet over that timeframe. These bans will likely delay 80,000 barrels a day of US oil production anticipated for next year. Layoffs and furloughs of workers will undoubtedly result when final instructions are issued by the Interior Department. While this amount relative to the global market is not huge, it will have some modest ongoing price effects and further increase US dependence on foreign sources.
Beyond the cost to the firms and industry involved, overall economic losses in the communities along the Gulf coast stand to be massive. Because of a government-directed fishing ban of more than 1,000 square miles, thousands of fishermen have already lost their livelihoods, at least for the summer months. Additionally, tourism has almost vanished in some areas, causing hospitality industries in those areas to suffer greatly. Although most beaches have not been affected by the oil spill, officials in some states indicated that just the threat of pollution causes a significant loss to the hospitality industry. Unfortunately, this saga is unfolding just as the peak season is beginning.
Moreover, the wetlands along the Gulf coast and the birds and sea life are facing substantial losses, some perhaps permanently. Dozens of species of fish, including one discovered only six months ago, are in danger of being wiped out. In addition, the dispersants used to control the oil spill have the potential to cause health problems among those involved in the clean-up and could even damage the marine ecosystem in the Gulf and beyond.
Although new regulations were put into place following the Valdez spill, it is apparent that few could imagine a disaster of the magnitude of the BP oil spill, and resources to contain it in the early stages were either not available or not utilized to their full capacity. It was more than a month after the spill before the state of Louisiana received permission and funds to create a wall of sand on its coastline to keep out the oil.
BP’s attempts to seal the leak have not worked thus far; however, the new mechanisms being used as we go to press appear promising. Irrespective of the success of interim measures, it will be another two months before the two relief wells being drilled diagonally in the well should solve the problem permanently.
The BP oil spill is without a doubt historic as an economic and ecological disaster and one that will be on the front pages of news media for some time. During this period, because of America’s ongoing thirst for oil, new oil drilling regulations will be written and safety procedures strengthened. As always, the challenge is to provide the level of oversight necessary to achieve safety, but to avoid the temptation to put in draconian measures that will disrupt long-term energy availability,
posted @ 08:02 AM CST [link]