The economy is the No. 1 issue on the minds of businesses, large and small. For many of these companies, progress begins at the local and regional level.
Smart Business learned more from Dana Johnson, chief economist of Comerica Bank, about prospects for the Texas economy in 2011 and how it compares to the national economy.
What is your outlook for the Texas economy for 2011?
I believe the state will continue to surpass national growth at least through 2011, extending a six-year run. In short, the past success of the Texas economy positions it for more success as a national and global expansion continues to emerge in 2011.
That is not to say that Texas is fully back on track. The jobless rate in Texas has stalled this year, while the national unemployment rate is inching lower.
Why the stalled jobless rate?
In part, Texas may be suffering from its own success. Both a below-average unemployment rate and a relatively stable housing market likely are sustaining the state’s reputation as a safe haven for job seekers, luring job applicants from other states, boosting the labor force and heightening competition for jobs.
What about housing?
Texas home prices are no longer as low relative to the rest of the nation as they were during the housing boom. That is because home prices outside Texas have fallen more sharply on average since the housing boom ended. However, the median price of an existing home in Texas is still roughly 15 percent below the national average, sustaining some incentive to move to Texas. Moreover, foreclosure rates in Texas are below the national average, according to the National Association of Realtors. The lower foreclosure rate should limit further downward pressure on Texas home prices.
Texas home prices never soared as they did in some other notable states. Annual price gains, as gauged by the Federal Housing Finance Authority (FHFA), never exceeded 7 percent, much less rivaled the peak gains seen in Arizona (33 percent) and California (25 percent). But, likewise, neither have Texas prices cratered.