For immediate release: September 30, 2010
Dallas Fed Report: Texas Manufacturing Survey Takes Pulse of the Economy
Report also examines Texas–U.S. unemployment gap, shale gas, containerized shipping
DALLAS—The latest issue of the Federal Reserve Bank of Dallas' Southwest Economy features articles on the Dallas Fed’s Texas Manufacturing Outlook Survey, the Texas–U.S. unemployment gap, Texas’ shale gas revolution and containerized shipping in Texas.
Although the Dallas Fed’s Texas Manufacturing Outlook Survey (TMOS) was designed for—and is most useful in—understanding the Texas economy, it can also contribute to explaining national developments, according to Franklin D. Berger, director of technical support and data analysis.
In “Texas Manufacturing Survey Offers Advance Look at State and National Economies,” Berger finds TMOS variables, such as the general business activity and new work orders indexes, have broad explanatory power for Texas and national economic indicators.
Business tendency surveys such as TMOS are increasingly used worldwide to monitor economic activity, Berger states.
“Because of a relative dearth of regional data, the Reserve Banks’ surveys are particularly valuable and often provide timelier information than headline indicators that are prone to revision as data are refined,” Berger writes.
Texas manufacturers employed almost a million workers and accounted for nearly 10 percent of U.S. manufacturing output in 2008, the last year for which output data are available, Berger says.
In “Texas Twist: Why Did State’s Unemployment Fall Below Nation’s?” senior research economist and advisor Anil Kumar finds the change in the U.S.–Texas unemployment rate gap largely reflects improved labor market prospects in the state versus the nation.
The Texas unemployment rate has trailed the U.S. rate by an average 1 percentage point since January 2007, a reversal of the trend from the 1990s through 2006, when Texas averaged 0.4 percentage point more unemployment than the nation, according to Kumar.
Prior to the recession, the number of people in the Texas labor force rose faster than in the nation, but population grew even more quickly—producing a large decline in the proportion of people in the labor force, Kumar states. Meanwhile, in the U.S., labor force participation fell less rapidly and greater unemployment occurred.
In “Natural Gas from Shale: Texas Revolution Goes Global,” vice president Robert Gilmer and assistant economist Emily Kerr say the newfound supply of natural gas from shale will likely lower the price outlook and price volatility of natural gas while improving its competitiveness with other energy options.
“The Texas experiment in the Barnett Shale proved the technical feasibility of shale gas development and brought costs within bounds that promise to give shale gas an important role in global energy supplies for decades to come,” Gilmer and Kerr write.
Additional regulations to protect or conserve groundwater could halt or slow development of shale gas extraction in some areas and reduce the contribution of shale gas to national energy supplies, they note.
Rapid growth in trade with Asia implies that containerized shipping will play an increasingly prominent role in Texas, according to this issue’s “SpotLight.”
With a strong local economy and proximity to population centers, Houston should benefit from any increase in containerized shipping. In addition, the Panama Canal’s expansion promises to drive more containerized cargo to Texas.
In an “On the Record” conversation, retired Coast Guard Capt. Bill Diehl, president of the Greater Houston Port Bureau, says the expansion of the Panama Canal puts Houston in an advantageous position.
“While East Coast Ports will compete with each other for market share in the eastern U.S., Houston is the logical gateway into the middle of the country and the northern Mexico market,” Diehl says. “We have 20 million people living within 500 miles of the port, and our population in this area is growing at three times the national rate.”
Phone: (214) 922-5288