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Dallas Fed report highlights Texas retail sales, labor markets, Texas commercial real estate

For immediate release: November 3, 2008

DALLAS—The latest issue of the Federal Reserve Bank of Dallas' Southwest Economy features articles on Texas retail sales, labor markets during crises, the globalized economy and Texas commercial real estate investment.

A new economic indicator published monthly by the Dallas Fed will provide timely estimates of retail sales in Texas, according to associate economist Jesus Cañas and senior research economist and advisor Keith Phillips in "New Dallas Fed Indicator Tracks Texas Retail Sales."

The Dallas Fed's Texas retail sales estimate fills a void that has existed since the U.S. Department of Commerce stopped publishing state-by-state retail sales data in 1996.

The initial estimate shows retail sales in Texas increased 10.1 percent from December 2007 to August 2008, compared with 0.8 percent for the nation, the authors state. Much of the growth for both Texas and the U.S. took place in May, June and July, reflecting the impact of both rising energy prices and government stimulus checks.

"The retail sales data we estimate not only support the notion that Texas is growing faster than the nation but also suggest Texas consumers feel confident enough to increase spending," Cañas and Phillips write.

The new indicator will be available on the Dallas Fed's web site under Regional Data Resources at

In "Labor Markets in Turbulent Times: Some Evidence from Mexico," Hunter College associate professor Sangeeta Pratap and Dallas Fed senior research economist Erwan Quintin find changing labor market flows during crises may cause deep drops in worker productivity.

During the 1994 Tequila Crisis in Mexico, real wages fell 6 percent for workers who changed both sectors and occupations, compared with workers who didn't move, the authors say.

"The large gaps between emerging and industrial economies may lead to differences in timing, magnitude and duration, but both are likely to experience significant labor market spillovers from financial distress," Pratap and Quintin write.

In an "On the Record" conversation, University of Wisconsin professor Charles Engel, a senior fellow of the Dallas Fed's Globalization and Monetary Policy Institute, says that global cooperation is needed to address the current financial crisis.

"I worry that without international cooperation, each country will try to devise schemes that favor its own banks and citizens at the expense of foreign investors," Engel says. "For example, countries might provide deposit insurance—but only for their citizens. We could end up taking a giant step backward in the globalization of capital markets."

This issue's "Spotlight" finds U.S. financial woes are taking a toll on commercial real estate investment in Texas. Uncertainty is prevalent among buyers and sellers of office, industrial, retail and apartment properties, and property sales are likely to remain subdued in the near term.


Media contact:
Alexander Johnson
Phone: (214) 922-5288