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2008-07-20 BACK
How the Texarkana Industrial Index is Tracking with the Texarkana Economy
How the Texarkana Industrial Index is Tracking with the Texarkana Economy This article originally appeared in the Texarkana Gazette on July 20, 2008 Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business The Texarkana Market Analysis Project (TMAP) of the Texas A&M University-Texarkana College of Business created, tracked, and deployed the Texarkana Industrial Index beginning in January of 2008. As you may recall, the Index is the weighted average of two pieces of data; the number of employees employed by the companies included in the Index (updated each quarter) and the current market capitalization for that company each week (market capitalization equals the number of outstanding shares times the stock price). In today's column I'll look at how the Index has performed relative to the Dow Jones Industrial Average and break down some of the key components of the Index to gain insight into Texarkana's industrial sector. At the beginning of 2008, the Dow Jones Industrial Average (DJIA) stood at 13,264.82. The DJIA is composed of 30 of the largest, most frequent traded public U.S. corporations that represent a cross section of the U.S. economy. It is perhaps the most widely recognized gage of the performance of the equity markets in the U.S. economy. At the same time, of course, the Texarkana Industrial Index (TII) was 100 (the starting point). At the end of the first quarter (3/31/2008) the DJIA had lost 1,001.93 points for a loss of 7.6%. The TII outperformed the DJIA in the first quarter. The TII reported index score on 3/27/2008 (last report for the quarter) was 97.0 or a drop of 3%. The DJIA for June 30, 2008 (end of 2nd quarter) was 11,350.01 while the TII reported on 6/26/2008 was 90.2. The DJIA lost 912.88 points in the quarter (7.4% quarterly loss) for a year to date loss of 1,914.81 points or a loss of 14.4% in the six month period. For the second quarter, the TII lost 6.8 points for a quarterly loss of 7.0%. For 2008 year to date, the TII has lost 9.8 points representing a 9.8% drop. What do the above numbers tell us? First, the industrial sector in Texarkana has outperformed the overall national economy (as represented by the DJIA). The unemployment figures back this up. For April 2008 the Texarkana MSA unemployment rate was 3.9% in April (U.S. rate was 5.0%) and 4.3% in May (corresponding 5.5% U.S. rate). Second, the numbers anecdotally support the adage I've heard about Texarkana – that while we may not experience the upper end of the economic highs, we normally don't experience the lower end of the economic lows. This “truism” holds for us when compared to the Texas economy the last two months. Texarkana's unemployment rate of 3.9% and 4.3% for April and May mirror the state average each month. Additionally, we find ourselves avoiding the high and low ends of the monthly unemployment rates reported in Texas (2.4% and 2.7% in Midland and 5.7% and 6.1% in McAllen/Edinburg/Mission for April and May respectively). So, what's driving the TII numbers? We need but look at two areas: employment numbers and stock price to discover the answer. Our commitment to the firms in the TII was to aggregate their employment numbers and to not identify specific company's employment levels. We can only comment on the aggregate employment numbers. The current firms in the TII employed 4265 people at the start of the year. The total employed dropped by 326 to 3939 in the first quarter and lost an additional 19 in the second quarter to put us at our current quarterly number of 3920 employees. This represents a loss of 8.1% for the six months ending 6/30/2008. The firms in the TII lost a collective $20.49 from January 1, 2008 over the first six months from their per share stock price. This was an 11.7% loss. In terms of market capitalization for the same time period, these collective firms lost $8,092,335,900 or 11.1%. For individual firms, the greatest loss came from Cooper Tire. The stock opened 2008 at $15.69 per share and closed 6/30/2008 at $7.84. Flowers Foods was the lone company that gained in value rising from $22.69 to $28.00 over the six month time period. What does this mean? In my opinion, while not good news, the numbers indicate that it could be worse. Collectively, our publically traded industrial sector firms are performing better than the national average of all sectors (DJIA numbers). Our local economy is performing well. We have better than average unemployment rates and our economy has created 1,000 new jobs for the year (thank you small business!). My commitment to you, the reader, is to show you the unvarnished, unbiased numbers. While I'll offer my opinions, you can use the numbers to decide for yourself. You can access the data yourself to gain additional insight (start at tmap.biz). The economic statistics for the national, state, and local economies were obtained from the Bureau of Labor Statistics. Technical note: Dow Chemical has discontinued operations in Texarkana and is no longer included in the TII. We've made corresponding adjustments that reflect this change. As always, please email me at Edward.Bashaw@tamut.edu with your thoughts and comments.
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How the Texarkana Industrial Index is Tracking with the Texarkana Economy
How the Texarkana Industrial Index is Tracking with the Texarkana Economy This article originally appeared in the Texarkana Gazette on July 20, 2008 Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business The Texarkana Market Analysis Project (TMAP) of the Texas A&M University-Texarkana College of Business created, tracked, and deployed the Texarkana Industrial Index beginning in January of 2008. As you may recall, the Index is the weighted average of two pieces of data; the number of employees employed by the companies included in the Index (updated each quarter) and the current market capitalization for that company each week (market capitalization equals the number of outstanding shares times the stock price). In today's column I'll look at how the Index has performed relative to the Dow Jones Industrial Average and break down some of the key components of the Index to gain insight into Texarkana's industrial sector. At the beginning of 2008, the Dow Jones Industrial Average (DJIA) stood at 13,264.82. The DJIA is composed of 30 of the largest, most frequent traded public U.S. corporations that represent a cross section of the U.S. economy. It is perhaps the most widely recognized gage of the performance of the equity markets in the U.S. economy. At the same time, of course, the Texarkana Industrial Index (TII) was 100 (the starting point). At the end of the first quarter (3/31/2008) the DJIA had lost 1,001.93 points for a loss of 7.6%. The TII outperformed the DJIA in the first quarter. The TII reported index score on 3/27/2008 (last report for the quarter) was 97.0 or a drop of 3%. The DJIA for June 30, 2008 (end of 2nd quarter) was 11,350.01 while the TII reported on 6/26/2008 was 90.2. The DJIA lost 912.88 points in the quarter (7.4% quarterly loss) for a year to date loss of 1,914.81 points or a loss of 14.4% in the six month period. For the second quarter, the TII lost 6.8 points for a quarterly loss of 7.0%. For 2008 year to date, the TII has lost 9.8 points representing a 9.8% drop. What do the above numbers tell us? First, the industrial sector in Texarkana has outperformed the overall national economy (as represented by the DJIA). The unemployment figures back this up. For April 2008 the Texarkana MSA unemployment rate was 3.9% in April (U.S. rate was 5.0%) and 4.3% in May (corresponding 5.5% U.S. rate). Second, the numbers anecdotally support the adage I've heard about Texarkana – that while we may not experience the upper end of the economic highs, we normally don't experience the lower end of the economic lows. This “truism” holds for us when compared to the Texas economy the last two months. Texarkana's unemployment rate of 3.9% and 4.3% for April and May mirror the state average each month. Additionally, we find ourselves avoiding the high and low ends of the monthly unemployment rates reported in Texas (2.4% and 2.7% in Midland and 5.7% and 6.1% in McAllen/Edinburg/Mission for April and May respectively). So, what's driving the TII numbers? We need but look at two areas: employment numbers and stock price to discover the answer. Our commitment to the firms in the TII was to aggregate their employment numbers and to not identify specific company's employment levels. We can only comment on the aggregate employment numbers. The current firms in the TII employed 4265 people at the start of the year. The total employed dropped by 326 to 3939 in the first quarter and lost an additional 19 in the second quarter to put us at our current quarterly number of 3920 employees. This represents a loss of 8.1% for the six months ending 6/30/2008. The firms in the TII lost a collective $20.49 from January 1, 2008 over the first six months from their per share stock price. This was an 11.7% loss. In terms of market capitalization for the same time period, these collective firms lost $8,092,335,900 or 11.1%. For individual firms, the greatest loss came from Cooper Tire. The stock opened 2008 at $15.69 per share and closed 6/30/2008 at $7.84. Flowers Foods was the lone company that gained in value rising from $22.69 to $28.00 over the six month time period. What does this mean? In my opinion, while not good news, the numbers indicate that it could be worse. Collectively, our publically traded industrial sector firms are performing better than the national average of all sectors (DJIA numbers). Our local economy is performing well. We have better than average unemployment rates and our economy has created 1,000 new jobs for the year (thank you small business!). My commitment to you, the reader, is to show you the unvarnished, unbiased numbers. While I'll offer my opinions, you can use the numbers to decide for yourself. You can access the data yourself to gain additional insight (start at tmap.biz). The economic statistics for the national, state, and local economies were obtained from the Bureau of Labor Statistics. Technical note: Dow Chemical has discontinued operations in Texarkana and is no longer included in the TII. We've made corresponding adjustments that reflect this change. As always, please email me at Edward.Bashaw@tamut.edu with your thoughts and comments.
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