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.
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 US Census Bureau recently released the 2020 Census estimated undercount and overcount rates from its Post-Enumeration Survey. While we feared an undercount for Texas, it was even worse than expected.
Job openings in Texas reached an all-time high in February at 932,000, far exceeding unemployment (about 635,000 at present). While that's beneficial for those looking for work, it's presenting notable challenges. Businesses unable to fill positions are often forced to respond by reducing operating hours or even closing locations, and the economy is functioning at less-than-optimal efficiency.
The number of oil and natural gas drilling permits issued by the Texas Railroad Commission reached an all-time high in March, at over 1,100. Hundreds of companies of all sizes are jumping into the fray. Activity is picking up across the state, with the Permian Basin reportedly seeing over 900 horizontal permits.
The recent invasion of Ukraine by Russia is generating questions regarding how important Russia is to the Texas economy, particularly as policies restricting trade and investment interactions are contemplated. The short answer: not very.
The past two years have been difficult, but the path forward is encouraging! Many parts of Texas have now reached or exceeded pre-pandemic employment levels, and unless a new and dangerous variant emerges, we may finally be able to put the worst of COVID-19 behind us. In fact, Texas is now more than 200,000 jobs ahead of its pre-pandemic peak. Supply-chain issues, worker shortages, and other challenges are likely to linger over the coming months, slowing the rate of expansion to some extent in the short term. Nevertheless, the outlook for the state remains highly favorable, and the momentum is palpable.
Texas has won the "Governor's Cup" – for the tenth consecutive time! Site Selection magazine awards the Cup to the state with the most major corporate locations and expansions each year. To be counted, projects must involve a capital investment of at least $1 million, 20 or more new jobs, or 20,000 square feet of new construction.