The US-China trade war continues to escalate with the addition of an alleged currency manipulation by the Chinese government. It's the latest in a long list of actions and reactions by both nations, and the stakes are escalating.
Major data breaches have become common headlines in an increasingly digital world. Recently, for example, one was announced by Capital One which affects about 106 million individuals. Data breaches are essentially situations involving unauthorized access to material containing sensitive personal information which could compromise confidentiality. They generate substantial costs from an individual, corporate, and economic perspective.
About 50 years ago, the first human stepped onto the surface of the moon. President John F. Kennedy set the goal of a moon landing in 1961, and eight years later on July 20, 1969, the Apollo 11 crew successfully performed lunar landing and return to Earth. It remains among the most impressive scientific achievements in history, and is particularly impressive when you consider that the mission was accomplished with much less technological firepower than the average smartphone.
We recently lost a remarkable Texan in H. Ross Perot, who died at age 89. While his passing justifiably invokes many and varied stories and commentaries, I will focus attention on his contributions to the Texas economy.
We estimate that the Texas oil and gas business and related industries generate nearly two million jobs around Texas when multiplier effects are considered (as described in a recent column). The energy sector includes oil and natural gas exploration and drilling, as well as the industries required to produce, transport, transform, and deliver it to markets throughout the world.
For well over a century, the vast reserves of oil and natural gas in Texas have contributed to business activity and job creation. We recently took a close look at the overall impact of the sector on business activity across the state and found that it directly or indirectly supports about one of every six Texas jobs.
Texas hit a new all-time low rate of unemployment, dropping to 3.5% in May. This series dates back to 1976, meaning that unemployment in the state is currently lower than during the oil boom of the 1980s or any of the other growth periods over the past four decades. The national unemployment rate was 3.6% in May, which was little changed from a year prior. The unemployment rate is not the best measure of the economy (my poor students had to endure an hour on that topic back in the day), but it generates a lot of attention and patterns over time can be informative.
The latest round of potential tariffs on imports from China expands the list to include virtually everything, and almost every sector will be adversely impacted. Numerous products which were removed via the hearing process from the $34 billion ("List 1"), $16 billion ("List 2") and $200 billion ("List 3") rosters are now included in the proposed $300 billion list ("List 4").
Economic vitality drives population expansion, particularly migration, and Texas cities are growing rapidly. The US Census Bureau recently released new population data which included estimates for city population changes from July 2017 to July 2018. Much of the time, economic series are tracked for "Metropolitan Statistical Areas," which are normally one or more counties linked to a large central city. While it makes sense from an economic perspective in that these clusters of counties are functioning largely together as an economic unit, slicing the data this way often conceals part of what's going on. For example, the Dallas-Plano-Irving Metropolitan Division is seven counties centered on Dallas and includes several other cities which are growing rapidly.
President Trump has threatened to impose 5% tariffs on all goods from Mexico on June 10 if Mexico does not take action to slow the number of immigrants at the border. As I am writing, he has vowed to continue to escalate the levies to 25%, Mexico has threatened to retaliate, and Congress has announced that it will stop them with enough votes to override a veto. Who knows what the status will be when you are reading this? Even if the situation is resolved, the threat of such action increases uncertainty and makes it more difficult to finalize a replacement for the North American Free Trade Agreement. If the tariffs actually go into effect and are maintained, it would cost hundreds of thousands of US jobs.