The U.S. economy is purring, hitting a 2.3% growth rate last year, and likely is immune from internal factors that could change its 11-year growth course under Republican and Democratic administrations alike, said Ray Perryman, a Waco-based economist and nationally regarded expert on economic trends.
But, Perryman added that so-called “black swans” could toss a monkey wrench into the works. These are factors that blindside the status quo, some good, some bad, Perryman said in an interview following his presentation at the Rotary Club of Waco meeting.
Also Monday, Perryman said Waco’s economy is in good shape, and should benefit from continued development downtown and along Lake Brazos. He said tourism is making waves locally and statewide, with increases in visitor tallies locally leading to a 2.6 million visitor count, representing 19% of the improvement statewide. He said he and his staff will be releasing additional statistics regarding tourism growth locally in the near future.
The growing coronavirus health threat is worth watching, when the incidence of black swans is considered, Perryman told about 100 Rotarians.
“It is too early to tell where the coronavirus is headed in terms of economic effects. It has certainly had some impact,” he said in an email. “The oil price response has been notable, and Texas manufacturers that rely on parts from China are seeing some bottlenecks develop. Tourism will also be affected by the travel restrictions. At this point, it hasn’t had a large effect, but if the situation worsens or persists, it certainly could.”
Of greater concern, Perryman said, would be “some type of cyberattack that shut down the financial markets, or impacted our major ports of entry. Can you imagine what would happen if those ports were closed for a month. There are a lot of not-so-nice folks trying to do that.”
Perryman said passage of the United States-Mexico-Canada trade agreement was significant to Texas, though he said it is not significantly different from the North American Freed Trade Agreement it replaced. He said not having a trade agreement between these neighboring countries would have been disastrous for Texas, saying one of every six dollars generated by trade between the countries is tied to the Lone Star State. He called Texas a “juggernaut” in the international trade arena.
He again criticized the use of tariffs to level the playing field among the world’s leading importers and exporters. He said tariffs on timber from Canada have boosted the average price of a home built in Texas by $6,000, while levies on aluminum and steel have added $1,500 to the price of cars and trucks built in Texas. He said trade wars are not good for the economy.
He said lacking a trade deal, the United States would have lost 600,000 jobs, more than 100,000 of those in Texas.
He said 13 million Texans go to work daily, as do 1.3 million undocumented workers living in the state. He said 40% of those working in construction statewide are undocumented. Those are numbers to consider, he said, as the number of undocumented workers entering Texas is declining.
“And we can’t go grab people from other states because the unemployment rate is low everywhere,” Perryman told Rotarians.
He said 52% of the school children in Texas are Hispanic, but the families from which these youngsters come represent only 4.8% of the state’s wealth. He said steps must be taken to reverse the trend of young Hispanics dropping out of high school, some to get jobs to support their families.
And in a world where high-skill jobs are increasingly in demand, Perryman said Texas must pay attention to education as it relates to workforce development.