Perryman: Despite headwinds, long-term economy looks good for Texas

Even as the hurricane continues, the Texas economy has been recovering, regaining ground lost during the COVID-19 shutdown and then some. In fact, Texas job growth between February 2020 (before the pandemic) and October 2022 represents an 80% increase in gains nationwide. Although the government is well positioned to remain strong, there are some challenges. Let’s take a short look at the long term.

The challenges facing the national and international economy will have a significant impact on Texas. After all, the government controls one-sixth of all US imports. Inflation has remained high and is only beginning to decline, and the Federal Reserve’s response has fueled rising interest rates and fears of a recession. Housing markets are also reacting, as some buyers price down the market, builders are putting plans on hold, and sellers are cutting prices.

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Because the Texas economy is stronger than most states, it may fall more or less slowly than most states. In addition, public housing markets have been more closely related to bottom-line growth rather than the speculative or temporary relocation of remote workers. While some price reductions are possible (and, again, good development due to lack of affordability), a major crash with long-term effects is unlikely.

Texas’ young population is well-positioned to meet long-term workforce needs, although it is critical that the state’s youth receive the education and training needed to prepare them for the jobs of the future. Many areas in the United States (and, indeed, the rest of the country) are seeing a declining youth population and will face labor shortages in the coming decades. Another thing that could be helpful for Texas is the ongoing migration to the state.

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Long-term economic growth will be affected by future trends in oil prices. Texas is an important partner in ensuring there are enough resources to meet demand and ensure strong security. The state will also be a leader in the renewable and emerging energy sectors.

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Our long-term forecast for the Texas economy shows that nearly 7 million new jobs are expected to be created in the years 2021 to 2050, for a total of 19.9 million jobs. Real sales are expected to rise from about $1.6 trillion in 2021 to about $3.9 trillion in 2050.

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Texas has been one of the fastest growing states in the country and was among the first to return to pre-pandemic jobs. There are positives and negatives to the long-term outlook, many of which are still unknown, but preliminary data suggest that the state economy will continue to improve through 2050 and beyond.

Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of more than 3,000 clients over the past four decades.

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