Special Questions

Texas Manufacturing Outlook Survey

Data were collected September 12-20 and 88 Texas manufacturers responded to the survey.

NOTES: 82 responses. Shown are averages, calculated as the mean of received responses. Prior to Apr. '22 respondents were not asked to break out fully remote versus hybrid, and responses could be lower as a result if respondents had in mind only workers working mostly remotely. Responses for Feb. '20 are from an Aug. '20 question asking, "What share of your employees were working remotely in February (pre-COVID-19)?"

NOTES: 35 responses. These calculations exclude respondents that answered “Not applicable; our share of remote employees has not increased,” which represented 57.8 percent of responses.

NOTES: 87 responses.

NOTE: 20 responses.

Chemical manufacturing

• Additional business and funding for energy transition projects.
• The IRA not so much; the CHIPS Act and the IIJA could directly impact our business in a positive way for capital investment and domestic sales.

Primary metal manufacturing

• We have seen slight increases related to these legislative initiatives; however, they have been overshadowed by several other factors.
• May pay for needed new equipment. Maybe more business as we supply parts for solar panels.

Fabricated metal product manufacturing

• Infrastructure investment is always good for our business.
• Future business opportunity, although it may be further out than one year.

Computer and electronic product manufacturing

• We expect spend on infrastructure to increase our customers' purchases.
• CHIPS Act is helping to put U.S. on the same playing field as most other regions of the world.
• Infrastructure investment.

Food manufacturing

• The IRA has driven inflation, which has hurt the average consumer who is our primary customer in the food business.

Wood product manufacturing

• Government spending is always bad. It is what caused the inflation, not the Fed [Federal Reserve].

Nonmetallic mineral product manufacturing

• We are paying a lot more interest to finance our receivables.

Fabricated metal product manufacturing

• We are a small manufacturer of heat exchangers, and the new regulations on refrigeration and HVAC [Heating, Ventilation and Air Conditioning] systems will increase costs significantly. The large corporations got tax breaks and stimulus money from IRA, CHIPS and IIJA. Small, privately held businesses like mine did not get any assistance. The government is about to impose a huge tax increase on small businesses by allowing existing tax rates to expire.

Machinery manufacturing

• Inflation.

Transportation equipment manufacturing

• Fraud program hyping green at the detriment of the economy.

Miscellaneous manufacturing

• Higher debt and higher taxes.

Texas Service Sector Outlook Survey

Data were collected September 12-20 and 274 Texas business executives responded to the survey.

NOTES: 253 responses. Shown are averages, calculated as the mean of received responses. Prior to Apr. '22 respondents were not asked to break out fully remote versus hybrid, and responses could be lower as a result if respondents had in mind only workers working mostly remotely. Responses for Feb. '20 are from an Aug. '20 question asking, "What share of your employees were working remotely in February (pre-COVID-19)?"

NOTES: 146 responses. These calculations exclude respondents that answered “Not applicable; our share of remote employees has not increased,” which represented 44.3 percent of responses.

NOTES: 266 responses.

NOTE: 48 responses.

Utilities

• It drives our business.

Transit and ground passenger transportation

• More available federal grants.

Credit intermediation and related activities

• We hope to receive some grants from the IRA.

Securities, commodity contracts, and other financial investments and related activities

• The energy components of IIJA will likely increase some advisory assignments that we do.
• Potential tax credits may accelerate the adoption of innovative construction technology.

Insurance carriers and related activities

• Increase construction of fabrication plants for a large customer of ours.

Real estate

• We should see some future construction projects as a result of the CHIPS Act.

Professional, scientific and technical services

• We expect to have requests from clients for more services to help them react to the legislation.
• We think it will bring more manufacturing to North America.
• Our firm does professional services and planning work in part supported by IIJA and IRA.
• More projects mean potential for more work in consulting. It is a slow process, so nothing immediate is expected.
• If inflation is held in check, it should flow through to our suppliers in preventing cost increases.
• Positive in terms of potential but no actual economic impact felt yet. More talk and no real implementation that translates into work and revenue.

Administrative and support services

• Generating increased level of investment activity.
• Will likely increase demand for employment services and training.

Educational services

• We expect the CHIPS Act to generate research funding and grants.

Support activities for mining

• Increased uncertainty. Provided money and incentives to competitors. The government should not be funding to ensure winners and losers in the market.

Data processing, hosting and related services

• The spending from these acts is causing inflation to rise and regulation that hurts businesses instead of helps them.

Credit intermediation and related activities

• Incentive to save for retirement is being undermined and will impact the future welfare of retirees.

Securities, commodity contracts, and other financial investments and related activities

• Inflation Reduction Act served to spur inflation, thereby slowing the rate of the decrease in inflation.

Professional, scientific and technical services

• Anything that artificially increases demand for materials makes pricing unpredictable.
• Inflation has increased due to all these acts/laws, which is affecting our business.
• Companies are holding cash.

Management of companies and enterprises

• IRA will further drive increases to salaries/compensation.

Administrative and support services

• Affecting product costs.

Amusement, gambling and recreation industries

• Increasing costs that cannot be passed on to the consumer. Weather also is dominating costs, so the combination of these two is going to be catastrophic.

Texas Retail Outlook Survey

Data were collected September 12-20 and 54 Texas retailers responded to the survey.

NOTES: 48 responses. Shown are averages, calculated as the mean of received responses. Prior to Apr. '22 respondents were not asked to break out fully remote versus hybrid, and responses could be lower as a result if respondents had in mind only workers working mostly remotely. Responses for Feb. '20 are from an Aug. '20 question asking, "What share of your employees were working remotely in February (pre-COVID-19)?"

NOTES: 16 responses. These calculations exclude respondents that answered “Not applicable; our share of remote employees has not increased,” which represented 68.0 percent of responses.

NOTES: 51 responses.

NOTE: 6 responses.

Merchant wholesalers, durable goods

• Growth in infrastructure and moves to alternative energy sources have expanded our business opportunity and share of spending by our customers.

Motor vehicle and parts dealers

• Electric vehicles tax credit for lease customers provides opportunity to expand the EV leasing business.
• Should increase overall business activity, which will increase our business.

Nonstore Retailers

• The Inflation Reduction Act has increased inflation.

Special Questions Comments

These comments have been edited for publication.

• Federal government initiatives are starting to attract projects to Texas/U.S. versus other global locations. It is a very positive impact.

• We are officially back in the office full time. We do have pockets where people work remotely and at higher rates than prepandemic, but no policy to support remote work is in place.
• The business activity level has been slower over the past few months. We do not worry about a one- or two-month slowdown, but it has been more prolonged than expected.
• We don't expect any positive impact from the huge government spending. We do expect to see increased taxes, which will hurt our ability to invest in our people and production capacity.
• The CHIPS [Creating Helpful Incentives to Produce Semiconductors and Science] Act is not working for our industry, and I doubt it is working for the semiconductor industry due to the regulations that came with it. I have heard of companies denying the incentives due to it.

• Bid activity is still high, but there is a deferral in starts of various projects.

• We have found that, for some positions, a hybrid work schedule is beneficial for employee morale, and we don't see much productivity decline, if any. In fact, with remote work, we see employees working on more "off" hours, which I think has a net positive impact on total working hours.
• We are a food manufacturer. We cannot make food remotely.

• Biden's CHIPS Act is corporate welfare for the big guys. It has not trickled down to the little guys.

• Interest rates are high enough. They are raising our cost of doing business. High rates also raise our customers’ cost of doing business.

• We are a manufacturing business that is not suited for remote work. We are fully in-person (including office staff) and believe this to be a competitive advantage for us (higher productivity, faster decision-making, etc.).

• We think that's a bunch of wasteful government spending that is doing nothing but fueling inflation.

• We think there will be significant funds available from those legislative actions for our customers, both existing and potential.

• We expect programs to increase demand for infrastructure products and increased borrowing activity for these programs.

• We have two employees on contract who are working remotely full time.
• We think that the federal programs will spur construction and keep employment very high and keep pressure on raw materials and construction costs, which for us means our tenants’ customers will have jobs and spendable money, and our tenants will be able to pay their rent. In addition, the country will get a great deal of new infrastructure, hard to see any negative to it.

• We are a small firm, and it seems probable that any legislation whatsoever is likely to harm our company. Big firms can afford to understand it and use it to their advantage; we cannot. Lack of qualified workers resulting in project delays drives up costs in the construction and design industry. Government regulations and mandates are also driving up costs. Remote work does not work well in the construction industry. Fewer flights and increase in travel costs also hamper the bottom line. With economic and political uncertainty, the industry is being quite cautious.

• All three IRA (Inflation Reduction Act), CHIPS Act or the IIJA (Infrastructure Investment and Jobs Act) are generating increased levels of investment activity.

• Related to remote employee productivity, our employees would insist they are more productive working remotely, however, we are still waiting for one of them to ask for more work. Additionally, we believe the long-term impact of remote work will be detrimental to business and employees. From the employee perspective, there will be less loyalty to the company and simply a focus on finishing the task. From the company perspective, without the interpersonal connection, businesses will look for alternative or cheaper ways to finish the task. For example, if we need journal entries booked and accounts reconciled to produce financial statements, and there is no connection with the people currently performing these tasks, then why not outsource these tasks abroad for a fraction of the cost?

• Increased government spending via IRA, CHIPS Act or the IIJA is continuing to infuse cash into the economy, cash that we don't have and is being borrowed at ever-higher interest rates, and masking the underlying structural weaknesses that will eventually lead to a financial and economic reckoning. The government would best serve us by suspending these types of interventions.