The Federal Reserve recently announced another increase in the target interest rate for federal funds to 3-3.25%. The point is to slow the economy in order to reduce inflation. It's a balancing act of the Fed's twin mandates – maximizing employment and keeping inflation at bay.
Among the most widely discussed economic phenomena in our post-pandemic world is the so-called "Great Resignation," a phrase used to describe what seems on the surface to be unusually high numbers of people leaving their jobs after the arrival of COVID-19.
Data recently released by the US Centers for Disease Control and Prevention (CDC) indicates that US life expectancy has once again fallen, with COVID-19 a primary culprit. The life span which could be expected for someone born in 2021 fell to 76.1 years, the lowest since 1996. For males 73.2 years could be expected, with 79.1 years for females.
In a disappointing but not unexpected development, US standardized test scores are showing a notable ongoing learning loss. Results from the National Center for Education Statistics indicate that average scores for age nine students in 2022 fell significantly compared to 2020. The five-point drop in reading, from 220 to 215 on a scale of 500, was the largest average score decline since 1990. In math, scores fell for the first time ever – seven points (from 241 to 234).
Despite the importance of its energy, food, and fiber, the Texas economy is increasingly services oriented. This outcome is not surprising given the sophisticated nature of the state's industrial base; it's a pattern common to every highly developed economy. Let's examine past and expected future trends.
Literacy is essential to many daily activities, and its importance to individual wellbeing can hardly be overstated. In an era of workforce shortages, it is rapidly becoming an economic imperative. The Program for the International Assessment of Adult Competencies (PIAAC) defines five levels of proficiency. Adults who are "Below Level 1" can, at best, read brief texts on familiar topics and locate a piece of specific information, with only basic vocabulary knowledge required. Levels 3 and above allow greater comprehension and application and are generally consistent with being able to perform some type of technical or professional labor.
Texas is a state known for wide open spaces, and we certainly have plenty of them. Nonetheless, people and jobs are increasingly concentrated in metropolitan areas. Let's look at some long-term trends and their implications.
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!!