It's no secret that the price of oil has been high and it's no secret that Texas' economy has been doing well. My friend Tory Gattis' at his HoustonStrategies blog has been posting a steady stream of articles from numerous newspapers and magazines covering the "Oil Boom" in Houston. Looking at the chart below it's easy to see that states with concentrations in oil and corn production (ethanol) are doing quite well, while the rest of the U.S. is ailing.
When comparing the state to other big states the trends really jump out at you. California and Illinois have deteriorated rapidly; Texas and New York not so much. In Texas, it's hard to tell that any employment recession is happening at all.
*note - Numbers in this graphic are from the Bureau of Labor Statistics and may not jive perfectly with numbers from the Texas Workforce Commission used later.
But is oil the sole reason? Houston's economy is heavily tied to the oil industry and justly labeled the energy capital of the world. Dallas is home to plenty of oil companies and other related businesses. San Antonio too has Valero, a booming oil refining corporation. The problem with this assumption that Texas fortune is merely a coincidence of high oil prices fails when you look at the cities that don't have much oil business.
Look at Austin, El Paso, and Laredo. According to the Texas Workforce Commission Austin has an unemployment rate of 4.2%, below the state average of 4.8% and "Boomtown" Houston's 4.7%. In El Paso, which has had a higher unemployment rate than the state for many years has seen it's rate go DOWN 0.2% in the last year while the state went UP 0.2%. Laredo, has seen it's unemployment rate climb at the same rate as the state as a whole. Oil then, can not be the only explanation. Texas is fundamentally business friendly as illustrated by the this recent post.
Another explanation is that Texas was able to avoid the housing bust. As I've stated in an op-ed a while back, Texas has seen little if any housing price drops and no increase in default rates. Was this by random chance? Did evil and greedy corporations simply forget to exploit the people of Texas? Not at all. Texas had no housing boom because cities run by both Republicans and conservative Democrats never fell for many of the Urban Planning myths. We let the market make the vast majority of development decisions and allowed supply to meet demand.
Over the last decade Texas has continued to hold to a mostly free market. It has continued to be business friendly. It has continued to keep taxes low with some cuts. While not perfect, I want to applaud our state and city leaders around the state for making mostly wise decisions.