Representative Ken Paxton’s Economic Outlook for Texas

Economy Outlook for Texas

 

In continuation from last week’s article regarding Comptroller Susan Combs’ latest biennial revenue estimate, I would like to share with you the Comptroller’s economic outlook for Texas.  As I mentioned last week, Texas has begun to feel the effects of the tightening economy, although we continue to fare better than most other states. In fact, in fiscal year 2009, Texas’ gross state product grew by 4.2 percent, versus 1.9 percent for the national economy.

 

In 2008, 2,589,000 jobs were lost in the United States.  In the 12 months ending in December 2008, Texas actually gained over 153,600 jobs (Texas added more than 1.2 million jobs to our economy in the last five years).  In fact, Texas accounts for 71 percent of entire job gains in the 15 states that experienced job gains. 

 

With regard to housing, Texas has weathered the national real estate crunch without significant damage to property values.  The Comptroller expects Texas’ property values to be more resilient than most, but it’s unlikely that we will remain completely immune from the national real estate crisis.  The number of building permits for single-family homes dropped by 33 percent over the last year.  Multi-family building permits are also down, dropping eight percent from November 2007 – November 2008.  Sales of existing homes are also slowing.  Texas is down 16 percent, while the rate has fallen only 14 percent across the United States.  However, prices for existing single family homes in Texas remain mostly steady, down only four percent from December 2007 – December 2008.  The Texas foreclosure rate has remained stable for the last three years, and declined sharply in 2008 from 14,698 foreclosures in January 2008 to only 7,843 in November 2008.  As over November 2008, Texas foreclosure rate was one in every 1,176 mortgages, compared to one in 76 in Nevada and one in 218 in California. 

 

Texas sales tax receipts for December 2008 actually increased two percent from the same month the year before.  State sales tax receipts for fiscal year 2009 are up 3.9 percent from fiscal year 2008.  However, slower economic growth has pushed the total growth in sales tax collections below its recent double-digit pace.  December 2008 retail establishment sales tax was up 1.3 percent compared to December 2007.  Consumers are shifting from specialty stores to general merchandize and “big box” stores.  Walmart, in particular, had a 3.4 percent sales gain over last year, while specialty stores were down more than 10 percent overall. 

 

Given the current economic trends, the Legislature must remain cautious this session when passing legislation that could affect our State’s economy.  We must maintain our business-friendly policies in order to encourage business and job growth and also keep taxes low to help struggling families. 

 

For the latest economic indicators, please visit the Comptroller’s Tracking the Texas Economy website at http://www.texasahead.org/economy/tracking/.  For more information on the Comptroller Combs’ economic outlook, please go to http://www.texasahead.org/economy/outlook.html.

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