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.
The European Union (EU) has announced a partial embargo on Russian oil in response to the invasion of Ukraine. By yearend, about 90% of Russian oil import volumes could be affected. It's a major blow to Moscow, which relies on oil and natural gas sales for economic sustainability.
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.
The Advanced Research Projects Agency for Health ("ARPA-H") was recently established as a new federal agency with the mission of transforming health research and innovation. The concept is similar to that of the Defense Advanced Research Projects Agency (DARPA), which has fostered countless breakthrough discoveries (and is about the coolest place on earth). ARPA-H is charged with finding solutions to society's most challenging health crises, including cancer, Alzheimer's, and AIDS. Moreover, treatments are to be broadly accessible to improve outcomes across the globe while simultaneously containing medical costs.
Things are tough for anyone trying to purchase a house, with a double whammy of rising prices and increasing interest rates. Inventories are very low, and supply chain issues and labor shortages continue to complicate construction.
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.