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2009-02-15 BACK
Texarkana 2008 Economic Review
Texarkana 2008 Economic Review This article originally appeared in the Texarkana Gazette on February 15, 2009 Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business To say that 2008 has been a rough year for our national economy is a drastic understatement. The fourth quarter was particularly bleak. During the quarter much of the national economy's underlying weaknesses began to be exposed. The equity market, as measured by the Dow Jones Industrial Average, dropped a whopping 19% (from $10,831.07 to $8,776.39). The Bureau of Economic Analysis reported Gross Domestic Product (the output of goods and services produced by labor and property located in the United States) dropped 3.8% for the quarter. It should have been worse. Slower than expected consumer spending caused an inventory buildup. Excluding inventories from the GDP equation would have resulted in a 5.1% GDP loss. Not a pretty picture for the national economy, but how about Texarkana? We know we avoided much pain when our Cooper Tire plant was spared closing. That will certainly impact the Texarkana 2009 economic picture. Today, I'll compare factors that go into the Texarkana Industrial Index (TII) with national numbers. I'll also review real estate market statistics and the Texarkana MSA employment situation for the quarter and year. We began the Texarkana Industrial Index in January 2008 with the Index at 100. The end of year TII reading of 79.4 was a 20.6% decrease for the year. The Index began the quarter at 86.7 and lost 8.4% over the course of the quarter. This actually represents good news for the Texarkana economy. The Dow Jones Industrial Average, as previously mentioned, lost 19% over the quarter while the seven companies in the Index lost 33.4% of their market capitalization (stock price times number of outstanding shares) over the same period. For the year, the TII companies have lost 51.7% of their market value. The saving grace for our economy was the extraordinary employment stability of these seven companies. The seven TII companies employed 3,888 at the beginning of the quarter and 3,888 at the end of the quarter. (Note: Though there were differences in each company's employment figures, remarkably, the total employment figure remained unchanged over the quarter.) But for the consistent employment levels, the TII, while low, could be much lower. Based solely on the TII, the Texarkana economy performed much better than the national economy in the fourth quarter and for 2008. The employment picture in Texarkana is good. For the quarter the unemployment rate in Texarkana was 5.1%. This compares very favorably with the national fourth quarter unemployment rate of 6.9%. The annual unemployment rate for 2008 was 4.7% in Texarkana and 5.8% nationally. Texarkana's unemployment rate for this year was the lowest recorded since our database began in 1990. The 2007 annual unemployment rate for Texarkana was 4.8%. The December unemployment rate in Texarkana is even more impressive. Texarkana's unemployment rate was 5.1% versus a 7.1% national rate. What's impressive is that of the 369 Metropolitan Statistical Areas in the U.S., Texarkana ranked 66 in lowest unemployment rates. The best U.S. unemployment rate for December was Morgantown, WV at 2.7%. The leader for Texas was Midland, ranked third at 3.1%. Arkansas' best rate was Fayetteville-Springdale-Rogers at 4.6%, ranking 45th. 2008 was a tough year for Texarkana builders. In 2008, 91 single-family building permits were issued. That was down 58.4% from the 219 permits issued in Texarkana in 2007. The good news is that the average value per dwelling was up 22.8% ($108,200 in 2008 versus $88,100 in 2007). As I have previously written, lowering new home construction has been helpful to the real estate market. This has kept the home inventory at a manageable level. Home inventory is measured by the number of months required to sell the current number of homes in inventory. Six months is generally considered the "normal" rate under average home-selling conditions. For 2008, Texarkana's average monthly rate for 2008 was 7.7. This is good considering the circumstances. In terms of real estate sales, Texarkana's picture is improving. Though total home sales for 2008 were down 5.5% in Texarkana (907 sales versus 960), fourth quarter 2008 sales were up 5.6% over 2007. The same holds true for average sales price during these time periods. The average sales price in 2008 was down 2.5% ($116,957 versus $120,057 in 2007). The fourth quarter of 2008 was up 3.6% over 2007 ($119,871 versus $115,670). This is much better than the national picture. Total sales, as estimated by the U.S. Census Bureau, were down 37.8% and the average sales price was down 7% for the year. Texarkana's economic picture in 2008 is better than the US economy and has made improvements over the fourth quarter in 2008. Real estate trends show sales volume and price improvements. The employment picture will be difficult to improve. 2008 was a record year in terms of unemployment. The employment outlook for Texarkana's largest employers that are represented in the TII is uncertain. The stock price declines of TII companies mean greater risk for maintaining current employment levels. However, the good news we hear from Cooper Tire is that Texarkana's largest publically traded local employer will maintain or increase employment levels this year. Note: The Texas A&M-Texarkana College of Business and the Texarkana Market Analysis Project will present our second annual economic forecast luncheon on Friday, February 27th from 11:30 to 1:30 in the Great Room of the Truman Arnold Center at Texarkana College. Dr. John Duca, Vice-President and Senior Policy Advisor for the Federal Reserve Bank of Dallas will be the keynote speaker. The event is sponsored by SWEPCO and the Texarkana Chamber of Commerce. Call 903.223.3020 (or email me at Edward.Bashaw@tamut.edu) to reserve your tickets or to get more information.
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Texarkana 2008 Economic Review
Texarkana 2008 Economic Review This article originally appeared in the Texarkana Gazette on February 15, 2009 Dr. Ed Bashaw, Dean, Texas A&M-Texarkana College of Business To say that 2008 has been a rough year for our national economy is a drastic understatement. The fourth quarter was particularly bleak. During the quarter much of the national economy's underlying weaknesses began to be exposed. The equity market, as measured by the Dow Jones Industrial Average, dropped a whopping 19% (from $10,831.07 to $8,776.39). The Bureau of Economic Analysis reported Gross Domestic Product (the output of goods and services produced by labor and property located in the United States) dropped 3.8% for the quarter. It should have been worse. Slower than expected consumer spending caused an inventory buildup. Excluding inventories from the GDP equation would have resulted in a 5.1% GDP loss. Not a pretty picture for the national economy, but how about Texarkana? We know we avoided much pain when our Cooper Tire plant was spared closing. That will certainly impact the Texarkana 2009 economic picture. Today, I'll compare factors that go into the Texarkana Industrial Index (TII) with national numbers. I'll also review real estate market statistics and the Texarkana MSA employment situation for the quarter and year. We began the Texarkana Industrial Index in January 2008 with the Index at 100. The end of year TII reading of 79.4 was a 20.6% decrease for the year. The Index began the quarter at 86.7 and lost 8.4% over the course of the quarter. This actually represents good news for the Texarkana economy. The Dow Jones Industrial Average, as previously mentioned, lost 19% over the quarter while the seven companies in the Index lost 33.4% of their market capitalization (stock price times number of outstanding shares) over the same period. For the year, the TII companies have lost 51.7% of their market value. The saving grace for our economy was the extraordinary employment stability of these seven companies. The seven TII companies employed 3,888 at the beginning of the quarter and 3,888 at the end of the quarter. (Note: Though there were differences in each company's employment figures, remarkably, the total employment figure remained unchanged over the quarter.) But for the consistent employment levels, the TII, while low, could be much lower. Based solely on the TII, the Texarkana economy performed much better than the national economy in the fourth quarter and for 2008. The employment picture in Texarkana is good. For the quarter the unemployment rate in Texarkana was 5.1%. This compares very favorably with the national fourth quarter unemployment rate of 6.9%. The annual unemployment rate for 2008 was 4.7% in Texarkana and 5.8% nationally. Texarkana's unemployment rate for this year was the lowest recorded since our database began in 1990. The 2007 annual unemployment rate for Texarkana was 4.8%. The December unemployment rate in Texarkana is even more impressive. Texarkana's unemployment rate was 5.1% versus a 7.1% national rate. What's impressive is that of the 369 Metropolitan Statistical Areas in the U.S., Texarkana ranked 66 in lowest unemployment rates. The best U.S. unemployment rate for December was Morgantown, WV at 2.7%. The leader for Texas was Midland, ranked third at 3.1%. Arkansas' best rate was Fayetteville-Springdale-Rogers at 4.6%, ranking 45th. 2008 was a tough year for Texarkana builders. In 2008, 91 single-family building permits were issued. That was down 58.4% from the 219 permits issued in Texarkana in 2007. The good news is that the average value per dwelling was up 22.8% ($108,200 in 2008 versus $88,100 in 2007). As I have previously written, lowering new home construction has been helpful to the real estate market. This has kept the home inventory at a manageable level. Home inventory is measured by the number of months required to sell the current number of homes in inventory. Six months is generally considered the "normal" rate under average home-selling conditions. For 2008, Texarkana's average monthly rate for 2008 was 7.7. This is good considering the circumstances. In terms of real estate sales, Texarkana's picture is improving. Though total home sales for 2008 were down 5.5% in Texarkana (907 sales versus 960), fourth quarter 2008 sales were up 5.6% over 2007. The same holds true for average sales price during these time periods. The average sales price in 2008 was down 2.5% ($116,957 versus $120,057 in 2007). The fourth quarter of 2008 was up 3.6% over 2007 ($119,871 versus $115,670). This is much better than the national picture. Total sales, as estimated by the U.S. Census Bureau, were down 37.8% and the average sales price was down 7% for the year. Texarkana's economic picture in 2008 is better than the US economy and has made improvements over the fourth quarter in 2008. Real estate trends show sales volume and price improvements. The employment picture will be difficult to improve. 2008 was a record year in terms of unemployment. The employment outlook for Texarkana's largest employers that are represented in the TII is uncertain. The stock price declines of TII companies mean greater risk for maintaining current employment levels. However, the good news we hear from Cooper Tire is that Texarkana's largest publically traded local employer will maintain or increase employment levels this year. Note: The Texas A&M-Texarkana College of Business and the Texarkana Market Analysis Project will present our second annual economic forecast luncheon on Friday, February 27th from 11:30 to 1:30 in the Great Room of the Truman Arnold Center at Texarkana College. Dr. John Duca, Vice-President and Senior Policy Advisor for the Federal Reserve Bank of Dallas will be the keynote speaker. The event is sponsored by SWEPCO and the Texarkana Chamber of Commerce. Call 903.223.3020 (or email me at Edward.Bashaw@tamut.edu) to reserve your tickets or to get more information.
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