Recent data indicates that the Texas economy continues to generate jobs at a torrid pace. In June, the state added 82,000 positions, pushing the year-over-year gain to 778,700. The 6.2% growth rate is second only to Nevada, which Texas dwarfs in size by a factor of more than nine. In May, Texas had about 974,000 jobs open, and fewer than 508,000 unemployed persons. The pace of expansion may moderate given challenges such as inflation, higher interest rates, and greater uncertainty on many fronts. Nonetheless shortages are most assuredly going to persist.
What will Texas jobs and the workforce look like in the future? The underlying driver is, of course, patterns in expansion by industry. We recently took a look at this question using our databases and models.
The Texas economy has been setting the standard for economic growth, leading the country in major new corporate locations for the past 10 straight years. The population is also diverse and growing, which is not the case in many parts of the country. We're also seeing the continued emergence of industries in the state as the business environment encourages growth. One segment where Texas once lagged other regions was that of biosciences and related manufacturing. Well, folks, that has changed!!
About this time last year, I referred to Texas falling to fourth in the CNBC rankings of top states for business as "eerily disturbing." That remark got more attention than I anticipated. My concern was only enhanced when the 2022 roster came out and Texas dropped further to fifth. North Carolina, Washington, Virginia, and Colorado all topped the Lone Star State. Although fifth certainly isn't catastrophic, it perpetuates a trend that needs to be reversed.
Virtually all of Texas is now abnormally dry. Comparisons to the bone-dry days of 2011 have begun, and it's not looking good. In fact, given the scope of the drought and the higher costs of inputs, agricultural losses across the state are likely to top 2011's record $7.6 billion total.
After agreeing not to support any new fossil fuel investments with public dollars after 2022, the G-7 has backtracked and decided to facilitate development of liquified natural gas (LNG) infrastructure. The G-7 provides a forum for leaders of the seven nations with the largest developed economies (as well as the European Union as a non-enumerated member) to discuss key issues and policies. Although this action is regarded as quite controversial by many, it's the right move at a critical time.
The price of gasoline remains elevated, with the national average briefly surpassing $5 per gallon before retreating modestly. In parts of the country (particularly those distant from refineries), it's already well above that level. Unfortunately, I think that prices will generally stay relatively high through the summer driving season before abating to some extent.
May was another solid month for the Texas job market, with the state posting by far the largest gain across the nation (+74,200), well above California (+42,900) and New York (+26,800). Texas was also near the top in percentage increase, an unusual feat for such a large state.
The latest surveys of consumers indicate that, as a whole, we are becoming a less optimistic lot. Because our spending on goods and services normally represents around 70% of the economy, that is a source of some concern (although, strangely, our confidence level and our outlays have not been particularly correlated over time).
A few years ago, I was asked to name the major events that shaped the Texas we know today. High on the list was the development of Allen's Landing and the Port of Houston during the early days of the Republic and the subsequent efforts at the dawn of the twentieth century to develop a deep-water channel in the area just as the oil industry was emerging. Without this critical infrastructure, Texas could not have become a vital hub of global commerce. I am tempted to say "and the rest is history" – but, in reality, it is also the future.