For immediate release: June 19, 2007
Service Economy, Housing Market, Maquiladora Data and Texas GDP Focus of Dallas Fed Report
DALLAS—Texas' service economy, housing market, maquiladora data and Texas GDP measurement are featured in the latest issue of Federal Reserve Bank of Dallas' Southwest Economy.
In "Texas Transitions to Service Economy," associate economist D'Ann Petersen finds that knowledge-based occupations in the service sector are fueling job growth in Texas.
High-wage jobs in fields like law, accounting, architecture, engineering, software design, management and consulting have driven growth in the professional and business services industry at an average annual pace of 5.7 percent since 1990, according to Petersen.
"The key to prospering as the economic base shifts lies in developing higher-end, knowledge-based services that offer better pay, greater productivity and global reach," Petersen writes. Increasing the number of jobs in services also helps Texas weather economic downturns, she adds.
A pullback in nonprime lending and decrease in home-price appreciation could negatively impact foreclosure rates, home prices, sales and construction, according to vice president and senior economist John Duca.
In an "On the Record" discussion of the housing market, Duca says while subprime lending has increased homeownership, problems with borrowers' ability to meet escalating payments are forcing some lenders to close.
"We're likely in the midst of a shakeout that will cause some retrenchment in mortgage availability," Duca says.
D'Ann Petersen also adds that several housing markets in Texas have cooled, partly because of tightened lending standards. While home sales in Austin and Houston remain promisingly steady, the Dallas–Fort Worth market has weakened.
In "Mexican Reform Clouds View of Key Industry," assistant economist Jesus Cañas and vice president Robert W. Gilmer report that Mexico stopped publishing maquiladora data effective March 2007. Beginning March 2008, the maquiladora industry will be merged into revamped Mexican manufacturing and export data.
The new reports will provide regional and industrial data similar to the old maquiladora reports, but for a year analysts will be without manufacturing data for Mexico's northern border. "The new data series won't mesh with the old, so long-term trends will be hard to track," they write.
In "Bridging the Texas GDP Gap," director of energy economics and microeconomic analysis Stephen P. A. Brown and economic analyst Raghav Virmani use a combination of state household employment and earnings data to conclude that "Texas GDP growth had a bumpy ride in 2006, with a downswing in the second quarter before a revival in the second half of the year."
Currently, time lags exist in how GDP data are reported, making them less useful for analyzing the state's economic performance. Brown and Virmani developed models to determine if other, more current measures, could accurately project Texas GDP in a timelier manner.
"We conclude that household employment and earnings data do possess the ability to anticipate state GDP numbers—with these two series performing better at various times of the year," Brown and Virmani write.
Find the May/June issue of Southwest Economy online at www.dallasfed.org.
Phone: (214) 922-5307