The US economy continues to recover from the pandemic. Even in the midst of challenges both domestically and internationally, our latest projections call for expansion over the next five years. Here's an overview of some key patterns influencing the outlook.
The last two (May and June) Texas jobs reports were encouraging, reflecting the fact that, as businesses began to reopen, what was essentially a sound economy before the pandemic responded relatively quickly. However, even with these gains, Texas is nonetheless almost 700,000 jobs below a year ago and about 900,000 below the level just before the outbreak began.
Traffic congestion costs the US economy billions in wasted time, productivity, and fuel. It also negatively affects quality of life and constrains potential growth. The past decade of expansion has pushed congestion to the highest level since the Texas A&M Transportation Institute began tracking it in its Urban Mobility Report in the early 1980s. The 2019 version was recently released, with data for 2017.
One of President Trump's first official actions was issuing an Executive Order to withdraw from the negotiations for the Trans-Pacific Partnership (TPP), an agreement that would have linked 12 nations in the largest free trade zone to date. As a practical matter, Congress wasn't going to support it in any case, so the Order was only symbolic. It is a genuine mystery to me how we evolved to the point that participating in the world economy is somehow a bad thing to do. That the belief is now present in both major political parties is even more baffling. Let me be very clear from the outset: Trade is good! In fact, trade is essential! We have centuries of history (not to mention some basic math that was figured out about 200 years ago) to illustrate this incontrovertible dictum.
Members of the Organization of Petroleum Exporting Countries (OPEC) have agreed to cut crude oil production by 1.2 million barrels per day beginning in January. Russia announced it would cooperate and lower production by 300,000 barrels per day, and there is some chance other nations representing about 20% of global production will also join in following an upcoming meeting.
In June, work was completed on an expansion of the Panama Canal, with hopes of increased trade between Asia and the US Gulf and East Coasts. The canal was originally completed in 1914 at a cost of more than $350 million dollars. It took a decade to build the lock canal stretching roughly 50 miles to connect the Pacific and Atlantic Oceans. The canal eliminates the need to travel around the southern tip of South America and shortens a sea journey from Asia to the US East Coast by some 8,000 miles.
The US economy is on fairly solid ground, and our latest forecast calls for moderate growth over the long-term horizon. There are several areas of concern and business cycles are inevitable, but on balance, I expect improvement in the years to come.