Special Questions

Texas Manufacturing Outlook Survey

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

NOTES: 84 responses. In Feb. '23, the question asked about 2023 versus 2022.

NOTES: 61 responses. This question was only posed to firms reporting an expected increase in question 1.

NOTES: 8 responses. This question was only posed to firms reporting an expected decrease in question 1.

NOTE: 84 responses.

NOTE: 84 responses.

Survey respondents were given the opportunity to also provide comments, which can be found in the Comments tab above.

Texas Service Sector Outlook Survey

Data were collected November 12–20, and 255 Texas business executives responded to the survey.

NOTES: 253 responses. In Feb. '23, the question asked about 2023 versus 2022.

NOTES: 139 responses. This question was only posed to firms reporting an expected increase in question 1.

NOTES: 32 responses. This question was only posed to firms reporting an expected decrease in question 1.

NOTE: 252 responses.

NOTE: 251 responses.

Survey respondents were given the opportunity to also provide comments, which can be found in the Comments tab above.

Texas Retail Outlook Survey

Data were collected November 12–20, and 49 Texas retailers responded to the survey.

NOTES: 49 responses. In Feb. '23, the question asked about 2023 versus 2022.

NOTES: 22 responses. This question was only posed to firms reporting an expected increase in question 1.

NOTES: 11 responses. This question was only posed to firms reporting an expected decrease in question 1.

NOTE: 48 responses.

NOTE: 48 responses.

Survey respondents were given the opportunity to also provide comments, which can be found in the Comments tab above.

Special Questions Comments

These comments have been edited for publication.

• The election results and forthcoming policy changes and impacts in the global economic environment should substantially improve U.S. business performance.
• Our outlook is cautiously positive, but much depends on the impact on possible tariffs and demand improving in the Asian market.

• We have invested in new equipment and new people in anticipation of growth in fourth quarter 2024 and throughout 2025. That has meant a small margin reduction in the short term, but we expect that to recover next year as we grow into our increased capacity.

• Margin increases are coming from expense reduction in business services—decreased insurance coverages and reduced limits, health care plan changes, building rental concessions, etc.—not increased demand or better top-line performance.
• We are still experiencing owners delaying the start of work. However, a large contract that had been delayed since last year has now started again.

• Our margin was impacted by manufacturing issues and downtime to complete plant upgrades. Benefits of the upgrades will positively impact margins in 2025.

• Capital expenditure for a new product line that carries significantly higher margins will improve EBIT [earnings before interest and taxes] for our company.

• We're unsure of how cost of goods sold (COGS) will change and if there will be any tariff impact. We believe any increase in demand/sales growth (also a change in sales mix with direct-to-consumer and business-to-business/wholesale) will likely be offset by rising COGS, so it’s a wash in terms of margin and profitability.

• Health care reimbursement challenges persist. With Medicare cutting physician reimbursement by 2.4 percent, we anticipate more downward pressure on reimbursement rates from commercial payers as well. Therefore, we are having to pivot to more cost-effective staffing models that revolve around providers and clinicians trained at a lower level.

• It’s very difficult to predict the hiring market. Our clients are not planning to increase their workforce or even start to backfill open roles. Currently we're meeting with clients to ask about their 2025 plans and can elaborate more next month. Overall, nothing has changed, and the market is still very slow for professional positions. In terms of operating margin, we have cut every technology expense we can and trimmed marketing to bare bones. If the market does not pick up, we will be forced to lay off employees, which we have avoided so far.
• Expectation of lower interest rates has increased business activity. Our margin performance has continued to improve.

• The U.S. economy and the global economy appear to be getting better with the U.S. election uncertainty behind us.
• Outlook for the next six months has improved. Previously we expected a 5 percent decline in revenue in 2025.
• Decreasing interest rates have had a positive impact on transactions.
• At the current level of activity, decreasing the number of employees appears to be the only way to increase or re-establish profitability.
• We are getting more efficient in our operation. This will allow us to hire more people and grow our marketing next year.
• We are waiting for first quarter 2025 economic news before making investment decisions.

• No doubt equipment dealers like us are overstocked due to manufacturers stuffing inventory as fast as they can to keep their plants producing. Inventory overload will result in lower sales.

• We hope the new president will change the economy in 2025.

• Our cost of labor is too high, and we are struggling with ways to bring it down. The challenge is that we cannot pay wages lower than our direct competitors.

• We are seeing some signs that investment sales of commercial real estate may pick up a bit in 2025. This is partly due to banks and other short-term lenders being forced to recognize matured performing loans that cannot be refinanced. This is starting to force the market to do more setting, which will bring more long-term investors back to the market with an attendant need for long-term, fixed-rate debt capital, which is our focus.
• Time will tell how the economy will react to the changes that have been promised. It is exciting and sounds good, and hopefully things will improve.
• We lend to non-prime consumers, and we have not seen any material increase in demand for loans nor an increase in losses. We have increased pricing roughly 20 percent over the past two years, and this has helped margins and offset the increase in our cost of funds.

• We have been pushing for increased spending on maintenance while in a prolonged period of profitability, which will decrease EBIT (earnings before interest and taxes) slightly.

• We're still heavily impacted by the macroeconomic environment over the past two years, primarily spurred by rising financing costs. The rise in financial costs has impacted cap rates (i.e., lowered asset values and sale prices), and our ability to capitalize new developments. Additionally, material and labor costs, operational costs including property management services (due to wages), property taxes (due to older valuations), insurance costs, etc., have remained high but have stabilized. Land prices have not adjusted to the new macro environment, and that does not make sense. Our expectation is that all developers are similarly impacted.

• The Inflation Reduction Act will have a negative economic impact on pharmacies due to its mandates. The payment systems used by pharmacy benefit managers (PBMs) to pay pharmacies is not fair and timely. Often the adjudication payments by PBMs do not cover the cost of the medication. Adjudication of prescription by PBMs, which is not fair and timely, causes undue economic hardship on pharmacies and their patients.

• Rises in property and casualty insurance, wages and employee benefits and increases in inventories are driving up costs. Margins are dropping due to customers seeking lower monthly payments; there is pushback on the tremendous increase in vehicle prices.
• We expect a double-digit decline in profit in 2024 versus 2023, and we are forecasting an additional 10 percent decline in 2025.
• Margins on new and used vehicle sales are declining, but volume is increasing slightly. Margins on parts and service sales both month over month and year over year remain the same.

• We are pessimistic that import tariffs will affect our export business in the form of retaliatory tariffs on U.S. goods being exported.
• Traffic in the store has remained the same, but sales per customer have dropped 7 to 10 percent.
• Our products are not essential, and people do not have excess disposable income. Schools have cut back on art classes. Nothing good!

• It's been stagnant for three years. In 11 years of business, the past three were the worst we have ever seen. We are positive that tax returns will improve business next year.