What’s in Store for Texas Retail? Dallas Fed’s Southwest Economy Looks at Challenges Facing Sector
Latest issue also explores inequities in state tax burden, student loan delinquency rates and LNG’s rise as a global commodity
For Immediate Release: September 21, 2017
DALLAS—Texas retailers have been stuck in the doldrums, and challenging times may yet lie ahead, according to the latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy.
The oil bust and ensuing economic slowdown took a toll on Texas retail, writes Amy Jordan in “Texas Retail in the Doldrums; Brick-and-Mortar Stores Take the Brunt.” State retail sales declined from second half 2015 through 2016—the first sustained drop since the Great Recession. U.S. dollar appreciation against the peso further depressed sales in Texas border cities, as Mexican visitors’ purchases in Texas became more expensive. Behind this slump, retail employment growth has languished and construction has slowed.
Respondents to the Dallas Fed’s Texas Retail Outlook Survey indicated that internet sales are rising at a faster rate than companywide sales, which is in line with national data, Jordan notes. This shift presents a particular challenge to traditional brick-and-mortar retailing.
“This trend will continue, with internet sales making up an increasing share of total retail sales,” she writes. “To survive, traditional retailers can further adapt the in-store customer experience and combine it with an online presence.”
In “Texas Taxes: Who Bears the Burden?” Jason Saving examines how Texas’ reliance on sales and property taxes places a disproportionate burden on lower-income Texans.
Sales taxes are the largest source of state tax revenue, Saving writes. Texans also pay property taxes levied by local jurisdictions. All told, the state and local Texas per capita tax burden is about 15 percent below the national average. The burden is also 26 percent below that of California and 52 percent below New York—the nation’s other two largest states.
Distribution of that tax burden, however, is less equal across income levels, with Texans in the lowest fifth of the income distribution paying 12.5 percent of their income in state and local taxes, which is about 2 percentage points above the national average, according to Saving’s analysis.
“Texas imposes a relatively low per-capita tax burden on citizens but a relatively large portion of that burden on low-earning households,” he writes. “In recent years, both sides of that tradeoff have been called into question.”
Also in this issue of Southwest Economy, Wenhua Di and Stephanie Gullo take a look at why “High Texas Student Loan Delinquency Rates Underscore Deeper Challenges.” Texas student loan borrowers have lower debt balances but higher delinquencies than the national average, according to the authors. Debt loads have also increased, further challenging Texas students.
In this issue’s Spotlight article, Rachel Brasier and Jesse Thompson explain how Mexican energy reforms have opened the door to shale gas from the United States, and a “Go Figure” infographic shows how Texas stands to benefit from the increasing commoditization of the liquefied natural gas market.
Southwest Economy also goes “On the Record” with Ronen Avraham. The University of Texas Law School professor discusses the economic impacts of medical malpractice/tort reform in Texas.
Federal Reserve Bank of Dallas
Phone: (214) 922-6748