Dallas economy is 'weak'?

[gc]

Dallas economy is 'weak'
Retail sales pick up, but jobs a top concern, beige book study finds
10:10 PM CDT on Wednesday, September 3, 2003
By ANURADHA RAGHUNATHAN / The Dallas Morning News
http://www.dallasnews.com/sharedcontent/dallas/business/stories/090403dnbusbeige.56b10.html

Texas' economy is limping toward recovery. There's no sign of real hiring yet, even though layoffs have eased a bit. That's the picture from the summer's economic snapshot released Wednesday by the Dallas Federal Reserve. The Dallas Fed – which encompasses Texas, southern New Mexico and Northern Louisiana – reported "generally weak" economic activity from mid-July to late August. This tepid verdict stuck out like a sore thumb amid more cheery reports in the Federal Reserve's latest beige book. The 11 other districts reported a perk-up in activity either across the board or in specific sectors, such as retail or manufacturing. "The Dallas district is one of the softer spots in the economy," said Mark Zandi, chief economist at Economy.com.

"It's less upbeat than the reports coming from the other districts." However, the Dallas report said, "there's improved optimism about the outlook for activity." For now, economists say, the weakness in Texas' technology and manufacturing sectors still hangs heavy. "This is not very surprising, because Texas was in a recession far longer than the rest of the country," said Fiona Sigalla, an economist at the Dallas Fed who writes the district's beige book report. "It's been a very different recession for Texas. We are not expecting a major drag. We are not expecting a major boost." The beige book is an anecdotal review based on dozens of interviews in each district with business executives across various sectors. The reports from the regions will be used when the Fed determines the direction of interest rates in the next Federal Open Market Committee meeting Sept. 16.

Higher retail sales

The Dallas Fed said Wednesday that retail sales picked up in the last few weeks, perhaps propped up by back-to-school shopping and the federal tax rebates. There was no palpable change in auto sales, and auto lending remained weak. There was no significant change in the regional manufacturing, service and energy sectors. The construction and real estate markets showed "very slight" improvement, while the financial sector reported "slightly improved conditions."

The dark spot

However, the dark spot in the economy – locally and nationally – is still jobs. The Dallas report notes that the pace of layoffs is slowing in the manufacturing sector, while there's a minor uptick in staffing for tech support and call centers. "There will continue to be some concern until we see some jobs," Mr. Zandi said. "Overall, the job market highlights the fragility of the recovery. The economy has clearly improved, but it is not translating into jobs." Texas' seasonally adjusted unemployment rate was 6.6 percent in July – a slight increase from 6.5 percent in June. Dallas' unemployment rate – which is not seasonally adjusted – dropped to 7.4 percent in July, from 8 percent in June.

No turnaround due

Labor market experts do not expect to see a turnaround in hiring at least until November. "Companies want to maintain their productivity quotas," said Rick Cobb, executive vice president at Challenger, Gray & Christmas Inc., an outplacement firm. "The unemployment number is not going to change drastically."

[dallastophoenix]

Smith predicts fast N. Texas growth

SMU-taught economist says region's on 'everybody's radar'

Noted national economist Dr. Jim Smith thinks 2004 will be a "barn-burner year" in North Texas, with all-time record levels of employment, income and economic activity.


"If the nation grows at 5% next year, Texas will grow at 7% and the Metroplex between 6% and 8%," Smith said. "It will grow faster than the national average, which is the norm. I don't like betting against 100-year trends. You've got five great years staring you in the face. Don't worry about any kind of national recession before 2010. ...

"You can take it to the bank," he said.

Smith, who earned his bachelor's, master's and doctorate from Southern Methodist University, taught economics at the University of North Texas before joining the University of North Carolina, where he is senior fellow and director of the Center for Business Forecasting.

Smith also is the chief economist for SIOR, a national organization of industrial and office real estate specialists. He was in Dallas Nov. 14 to address the group's annual national convention, which drew close to 1,000 attendees.

Smith said people often underestimate the role Texas plays in the global economy.

"Usually when we talk about the global economy all over the world, we just talk about the United States and other countries," he said. "Rarely do people look at the U.S. as a collection of 50 states, much less a collection of 325 Metropolitan Statistical Areas. But if you do that, you get some interesting insights about just how huge our economy is in relation to other countries throughout the world.

"The U.S. contains just 4.7% of the world's people, yet we account for $1 of every $3 in economic output," Smith said. "The most recent data we have for gross state product shows Texas in 2000 had $742.3 billion in economic output. That number is over $800 billion today. If Texas went back to being a country, it would be the eighth-largest country in the world, in terms of economic output.

"Make no mistake about it, Texas is a global market player."

Within Texas, the Metroplex is the state's wealthiest area, with 2001 total personal income of $180 billion, Smith said.

"Dallas all by itself, at $127 billion, is equal to the entire state of Arizona," Smith said. "Fort Worth-Arlington had $53 billion in personal income, more than Nebraska and about equal to the state of Utah. This is why you see pick-ups in commercial and industrial real estate in North Texas.

"The Metroplex is on everybody's radar screen, everywhere in the world."

Turning to international affairs, Smith cautioned SIOR attendees not to listen to talk about potential instability in China and how it might affect the U.S. economy.

"Forget about China; China is doing fine," he said. "Pretty soon, maybe next year, their economy, with 1.4 billion people, will actually be bigger than the Texas economy. But it ain't yet."

Smith has been recognized by The Wall Street Journal, Business Week magazine and the Forecasters Club of New York for accuracy in economic forecasting.

Allen Gump, North Texas chapter president of SIOR, said Smith has an "uncanny ability to predict economic trends."

"He is really focused on the reality of situations," Gump said. "He's good at putting things in the proper perspective."

Contact DBJ writer Christine Perez at cperez@bizjournals.com or (214) 706-7120.

[bloodandpopcorn]

Great article... He sounds like an interesting, good guy. The comment about China caused an audible burst of laughter!