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Texas' economic recovery, housing prices and Japanese economy examined in Dallas Fed publication

For immediate release: April 5, 2004

DALLAS—The latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy explores Texas’ economic expansion, national housing prices and Japan’s economic recovery.

In “Economic Recovery Under Way in Major Texas Metros,” associate economist D’Ann Petersen and economic analyst Priscilla Caputo find that signs of economic growth in Texas’ five major metropolitan areas are encouraging and signal an improvement in the jobs outlook. The authors closely examine the economic status of Dallas-Fort Worth, Houston, San Antonio, Austin and El Paso.

“Although Texas’ recovery so far has been mostly jobless, just like that of the nation, there are signs of a recent strengthening that should spur employment growth in the coming year,” they write.

Bright spots on the state’s economic horizon include increased semiconductor and computer orders and venture capital spending growth, benefiting the high-tech industry. Additionally, Mexico’s economic recovery portends well for border retail sales, and high oil and natural gas prices should spur growth in the energy industry.

Although a housing-price bubble could affect the nation’s economic recovery, vice president and senior economist John Duca states in “How Vulnerable Are Housing Prices?” that the chances of such a national bubble are slim. However, housing prices in some Pacific coast and Northeastern cities are vulnerable if their local economies weaken. If that unlikely scenario occurs, growth of the national economy could slow, given the importance of those regions to America’s overall economic health, he states.

“Looking ahead, housing will probably provide less of a boost to overall economic growth than in the 1990s, particularly because housing construction is likely to moderate and home equity withdrawals will probably slow or level off, thereby contributing less to consumption growth,” Duca writes.

In “Is Japan’s Long Nightmare Finally Over?” economist Jahyeong Koo and assistant economist Dong Fu conclude that the strongest economic signs in a decade point to a solid rebound for Japan.

“Domestic flexibility, globalization and, particularly, the China factor all point to a sustainable economic recovery. The long nightmare may indeed be over,” the authors write.

However, the continuing problem of deflation could be an obstacle to Japan’s recovery. “The major concern is that the financial sector cannot function properly until deflation worries disappear,” they state.
Find the March/April issue of Southwest Economy online at


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