After watching or reading the news, it doesn't take much to get a sense that the economy isn't so bright these days. Never before in my lifetime (only 28 yrs) have I ever encountered such negative, pessimism about the economy.
Here, where I live in North Texas, we seem to barely be holding off the soon-to-be-declared recession that is gripping the nation. Yes, we've been lucky here so far with natural gas royalties and all things Barnett Shale related, but even that opportunity is drying up as natural gas prices plummet, for now. Still, despite that, around here, houses are still being built, albeit, at a slower pace, apartments are still being constructed and hotels are still popping up.
For Texas, there are still lots of opportunities for economic growth. This of course, is assuming that the financial markets continue to see some loosening as Uncle Sam lives up to his promise or buying up bad debts and restructuring the financial industry. Texas has a slight upper hand here as two things go into play: housing prices, which, here, never got over-inflated to begin with, and the fact that Texas has had to endure this sort of thing before relatively recently through the real estate crunch and the savings and loan crisis of the 1980's. Perhaps, because of the learned lessons from that time, Texas banks have been better prepared this time around, and didn't make as many risky sub-prime loans that seemed to have plagued the larger financial institutions of the US. An example of this is Frost Bank, which was bold enough to turn down federal bailout money.
Another important contributor to the health of the Texas economy is due to the diversification of the economy that has developed in the last 20 yrs. When energy prices plummeted in the 80's the Texas economy suffered, and really only rebounded thanks to growth in the technology and service industries. This growth was of course spurred by the relatively cheap cost of business, lower cost of living and the availability of higher education for its citizens. In the early 2000's, when technology peaked, energy prices began steadily rising, resulting in the first significant new growth in the energy sector in over 20 years. This more than offset any losses due to any decline in the IT industry. Texas was also able to maintain generally lower costs of living due to lower housing costs (thanks to the seemingly endless amounts of land available and availability of cheaper labor mostly from bordering Mexico.) Texas has also enjoyed some of the lowest energy and transportation costs (thanks, of course, to the energy industry itself.)
Because of these advantages, along with business friendly laws, many companies and organizations have either relocated their headquarters to town, or they've brought in significant production facilities. With many companies looking to save on their bottom line, I won't be surprised to see more offices opened up down here. Still, there is a possibility that Texas will eventually succumb to the recession forces that are roaming around the land, but even so, it should occur at much less of a blow to the economy than in other states. Texans could all benefit from a slowing of economic growth to give us the opportunity to catch up on building new infrastructure to help serve the growing population. If President-Elect Obama's economic plan is passed through Congress after his inauguration, Texas should stand a good chance to see some funding come from long awaited and overdue projects that we've been needing for years. Hopefully, all states will have a fair share as well, proportional to their needs, but, of course that's all in the eyes of policy makers. Another great opportunity that Texas should benefit from, is from the growing need for "green" energy. If you didn't know otherwise, your intuition would likely give you the idea that this would harm the Texas economy since it has been so dependent on fossil fuels. Thankfully, Texas has not only been blessed with a plethora of fossil fuels, but also a treasure trove of potential green energy sources from biowaste energy in East Texas, to biofuels, such as biodiesel, grown in the open plains of Central Texas, to wind and solar resources in West Texas.
The bottom line here is this: because Texas won't see as severe of an economic downturn as the rest of the nation and since Texas still has a lot of untapped resources that are compatible to our desires to meet our future's greener energy needs, Texas will be poised to take the lead with great economic growth opportunities to economic for the state, which should benefit the rest of the US and the global economy as well. Our abundance of energy will be met however with new demand for it (despite our future gains in conservation and efficiency.) We'll have new needs like desalinating sea water and urban food production along with newer types of transportation to water, feed and move a population that will nearly double in size with each passing generation. The key is for the US to take this economic turmoil and use it to shift gears from a 20th century economy to a 21st century model and that can start right here with Texas.
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