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T E i U d tTexas Economic Update
Mine Yücel
Federal Reserve Bank of DallasFederal Reserve Bank of Dallas
Federal Reserve Bank of Dallas
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Texas Economic UpdateTexas Economic Update
• Texas employment grew 2 1 percent in 2011Texas employment grew 2.1 percent in 2011– Added a total of 197,200 jobs
256 100 private jobs– 256,100 private jobs
• Expect similar job growth in 2012
• Faster growth possible if national and global economies pick up
Federal Reserve Bank of Dallas
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Texas economy 1/12th of U.S.
G h 261 797 Mi2 7 4% f U S L d AGeography 261,797 Mi2 7.4% of U.S. Land Area
Population 25,145,561 8.1% of U.S. Population
Output $1,207.5 (Bil.) 8.3% of U.S. GDP
Employment 10,433,500 8.0% of U.S. Employment
Federal Reserve Bank of Dallas
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Texas’ employment growth bests nation’sTexas employment growth bests nation s
4 U.S. Texas
Dec/Dec, SAAR
Nov/Dec Annualized
2.1 2.12
3
4
0.7
1.3
0.5
0
1
-2
-1 Dec/Dec
-2.6
-3.8-3.4
5
-4
-3
Federal Reserve Bank of Dallas
-52000 2002 2004 2006 2008 2010
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The Texas Recovery: StrengthsThe Texas Recovery: Strengths
• Strong energy sectorStrong energy sector
• Rapidly growing exports
h i b bbl b ( i b• No housing bubble or bust (construction bust yes)
• Healthy banks
• State finances relatively healthy, although y y, gbudget cuts hurt
Federal Reserve Bank of Dallas
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Government job losses huge drag in 2011j g g
3 7 3 6
6Q/Q, SAAR
Nov/SeptAnnualized
2.7 2.5
1.71.0
3.73.2
3.6
2.12
4
-0.9
0
-1.8
-4.0-4
-2
TX Nonfarm TX Private TX Government
7 2
-6
Federal Reserve Bank of Dallas
-7.2-82011 Q1 2011 Q2 2011 Q3 2011 Q4
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2011 employment growth(NAICS Super Sectors, SA by FRB Dallas
58.9
80
( p , yYTD growth through Nov)
Thousands of jobs
44.3 43.2
58.9
35.8
25.331.340
60
9.3
3 0 -1 40
20
-3.0 -1.4
-40
-20
-58.9
80
-60
Oil & Gas Trade Prof &
Federal Reserve Bank of Dallas
-80 Oil & Gas Extraction and Mining Support
(2.2%)
Financial Activities (6.0%)
Trade, Transp & Utilities (19.9%)
Manufacturing (7.9%)
Educational & Health Services
(13.6%)
Construction (5.3%)
Leisure & Hospitality (10.0%)
Information (1.8%)
Prof. & Business Services (12.8%)
Government (16.8%)
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Construction activity weakReal $ Mil
3500
4000
Real $, Mil6MMA, SA
3000
3500
Nonresidential
2000
2500
Residential
Nonresidential
1000
1500
Residential
0
500 Nonbuilding
Federal Reserve Bank of Dallas
02005 2006 2007 2008 2009 2010 2011
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New home construction 120
Index, SA, 5MMAJan 2008=100
100
120
80
60
Single Family Permits
40Single Family Starts
20Multifamily Permits
Federal Reserve Bank of Dallas
02008 2009 2010 2011
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House prices not yet stable(FHFA Purchase‐Only Index, Q2)
304-Q Percent Change
20
30
10
-10
0
CAU.S.TX
-20
40
-30
Federal Reserve Bank of Dallas
-402000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Mortgage delinquencies fallingPercent SA
5
6 Texas Deliquencies Texas Foreclosures StartedU.S. Delinquencies U.S. Foreclosures Started
Percent, SA
4
5
2.8
3.5
3
2
0.7
1.0
0
1
Federal Reserve Bank of Dallas
01998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Texas has much lower share of dunderwater mortgages
70
Percent of mortgages with balance > home value, 2011Q3
5860
4744
3540
50
30
22
20
30
10
0
10
Federal Reserve Bank of DallasSource: Core Logic
0Nevada Arizona Florida Michigan California Texas U.S.
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Noncurrent loans by loan typeU S banksU.S. banks
6
Other
Percent of Loans
5 Other Consumer
Credit Card
Commercial & Industrial
4.2
3
4 Commercial & Industrial
Commercial RE
Residential RE
2
1
Federal Reserve Bank of Dallas
02005 2006 2007 2008 2009 2010 2011
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Noncurrent loans by loan type11th District banks11 District banks
3 5
4
Other
Percent of Loans
3
3.5Other Consumer
Credit Card
Commercial & Industrial 2.5
2
2.5
Commercial & Industrial
Commercial RE
Residential RE
1
1.5
0.5
1
Federal Reserve Bank of Dallas
02005 2006 2007 2008 2009 2010 2011
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Share of unprofitable banksShare of unprofitable banks
31
35Percent of Banks Reporting a Net Loss
31
25
30U.S. 11th District
22
20
25
15 1514
12
9810
1515
5
7
Federal Reserve Bank of Dallas
02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Q1 '11 Q2 '11 Q3 '11
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Slight easing of drought conditionsSlight easing of drought conditions
O t b 2010 O t b 2011 N b 2011October 2010 October 2011 November 2011
Federal Reserve Bank of Dallas
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High oil prices and newh l i f l d illi
1601100Rig count, weekly
Nominal price,$ weekly
technologies fuel drilling
120
140
800
900
1000
TX Rig Count
80
100
600
700
40
60
300
400
500
l i
Oil Price (WTI)
0
20
40
0
100
200Natural Gas Price
Federal Reserve Bank of Dallas
002005 2006 2007 2008 2009 2010 2011
Note: Gas price is multiplied by 10
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Texas exports softeningTexas exports softening
Index, SA, Real17% 16%Other
200
Texas
Index, SA, Real2000 Q1=100
7%12%
4%Mexico
Canada2011:Q2
160
180
35%
9%European Union
Asia, excl. China
120
140
100
120
U.S. minus TX
Federal Reserve Bank of Dallas
80 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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SummarySummary
• Texas employment grew 2 1 percent in 2011Texas employment grew 2.1 percent in 2011– Added a total of 197,200 jobs
256 100 private jobs– 256,100 private jobs
• Expect similar job growth in 2012
• Uncertainty and risk in the outlook
Federal Reserve Bank of Dallas
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Q ti ?Questions?
Please go to www.dallasfed.orgfor data and regional
information.
Federal Reserve Bank of Dallas