Special Questions

Texas Manufacturing Outlook Survey

Data were collected March 12–20 and 84 Texas manufacturers responded to the survey.

NOTES: 76 responses. Shown are averages, calculated as trimmed means with the lowest and highest 5 percent of responses omitted. Firms reported on changes in wages and prices experienced in 2023 as well as expectations for 2024 in December 2023.

NOTES: 80 responses. "Domestic policy uncertainty" was added in December 2023.

Texas Service Sector Outlook Survey

Data were collected March 12–20 and 265 Texas business executives responded to the survey.

NOTES: 233 responses. Shown are averages, calculated as trimmed means with the lowest and highest 5 percent of responses omitted. Firms reported on changes in wages and prices experienced in 2023 as well as expectations for 2024 in December 2023.

NOTES: 251 responses. "Domestic policy uncertainty" was added in December 2023.

Texas Retail Outlook Survey

Data were collected March 12–20 and 52 Texas retailers responded to the survey.

NOTES: 46 responses. Shown are averages, calculated as trimmed means with the lowest and highest 5 percent of responses omitted. Firms reported on changes in wages and prices experienced in 2023 as well as expectations for 2024 in December 2023.

NOTES: 50 responses. "Domestic policy uncertainty" was added in December 2023.

Special Questions Comments

These comments have been edited for publication.

• Inflation for our inputs has moderated significantly and is very low. Labor costs are steady, and we expect to give a 2–3 percent increase at the beginning of our next fiscal year in July.
• Beef commodity prices and supply are hurting margins and overall profitability.
• Geopolitical tension, both internal and external, has the potential to disrupt the world balance and create havoc.

• After COVID, we saw a significant increase in oil drilling activity in 2021 and then another but more modest increase in 2022. But, similar to other cycles, 2023 saw a reduction in activity that could be best described as being attributed to increased costs, over-drilling and improved efficiency. This has carried over into 2024. North American rig counts are down almost 20 percent from a year ago and continue to drop. We will weather this downturn like we always do. My best guess is that it’ll be the third quarter, maybe fourth, before we start to see a rebound. Now we just need to see how the 2024 election cycle ends up.

• It’s very difficult to select only three outlook concerns. I would add weakening demand, inflation and higher labor costs coupled with higher medical costs—all will push us to again move production offshore. Yes, we may have to pay an increased tariff, but this will be less expensive than $25 per hour base labor rates to which we have to add another 20 percent for medical and still have an unmotivated employee.

• We expect to pay off our debt over the next three months and keep it that way because of the high interest rates that have cost us dearly. That money will then be used to develop new products to expand our business.

• Don't you think the Federal Reserve oversteered on interest rates? Isn't it time for a quick correction? This is hurting an industry that is trying to bring manufacturing back to this country.

• Demand for our product has decreased causing downward pricing, while all input costs have continued to increase.

• As a state institution, we are not allowed to raise prices for the next 18 months. We face significant budget stress as costs have risen.

• Inflation has not been as significant of a problem for us as higher cost of capital, which is impacting our customers and our customers' customers as well. While inflation is a concern, we are more concerned over the inability for enterprises to invest, which may compound and lead to sudden and dramatic increases in layoffs and bankruptcies. The Federal Reserve seems to think these impacts will occur gradually, giving it time to decide how to approach rates, but our real concern is a sudden recessionary turn.

• The squeeze of higher input costs and pressure to keep selling prices the same is requiring difficult management decisions. The uncertainty about future Federal Reserve actions regarding interest rates, regulation and elections hurts businesses and the economy, adding to the challenges of business growth and confidence. Our clients are feeling the pain of Consumer Financial Protection Bureau decisions, which greatly reduces their revenue and has a negative ripple effect on all providers to financial institutions.

• Banks are no longer extending debt.

• Among small business owners there a feeling of dread with a labor shortage and high turnover. This labor shortage inhibits growth and stability.
• Dallas–Fort Worth remains strong, with continual opportunities for growth. As a result of the relatively strong and reliable economy in this region, there has been a continual inflow of companies and increase in competition in our space. This has the effect of overwhelming and confusing the marketplace and buyer.
• Continuing increased regulatory burden on the fossil fuel industry is having an adverse effect on business outlook. Increased costs are effectively a tax and will be passed on to customers, eventually landing on consumers, weakening demand and exacerbating recessionary forces. Inflation and high interest rates will further weaken the economy and require belt-tightening and potential layoffs if demand softens further.
• Labor costs were a big increase during the second half of 2023. Labor costs seem to have stabilized.

• Interest rates remain too high on an absolute and relative basis. Inflation continues to be a real issue.

• Feed commodities continue to drop and ag inputs prices like fertilizer are rising strongly. Energy prices are stable to higher. It’s a mixed bag depending on your area of need—lower feed prices, but higher input prices.
• Labor costs are trending higher but have slowed over the last month. The number of applicants has increased, so we think we will see wages start to stabilize. We are in the food and agriculture business, and we see commodity prices have started to stabilize, so some inventory pricing has started to come down.

• The struggle to find quality new employees continues to be a major issue for us to grow and meet customers' needs. Geopolitical changes and uncertainty have a large impact (both foreign and domestic) on our forecast right now. 

• A long-term employee with a decades-old furniture company in Dallas told us that his company is having financial trouble and that most furniture companies in the region are. What has happened in our economy to make this buying habit change?