The Texas Economy Online is an ongoing review of the most recent statistical data about the state’s economy and people. This review provides a brief analysis of economic and demographic trends and is intended to serve as an onestop gateway to timely economic data on the World Wide Web.

Population

The population of the Lone Star State reached 23,904,380 in July 2007, according to the latest estimates from the U.S. Census Bureau. According to a another 2007 Census data release, Texas had three of the top ten most populated U.S. cities: Houston ranked #4, San Antonio ranked #7, and Dallas ranked #9. Census estimates indicate that Texas had four of the top ten metro areas with the highest numerical growth from 2006 to 2007: Dallas-Fort Worth ranked #1, Houston-Sugarland-Baytown ranked #4, Austin-Round Rock ranked #8, and San Antonio ranked #10. Texas also had one metro area in the top ten by fastest population growth from 2006 to 2007: Austin ranked #5. In 2007, Texas was home to eleven of the top 25 fastest growing counties and five of the top 10 counties that added the largest number of residents, according to the latest Census population estimates. The 2000 Census indicates that 82.5 percent of Texas' population lives in metropolitan areas. The urbanizing of Texas is underscored by recent growth trends - the state’s metropolitan areas accounted for over 91 percent of Texas population growth between 1990 and 2000. Growth has occurred primarily in the large metropolitan areas of Austin, Dallas, Houston, and San Antonio. Austin added 403,536 people during the 1990s, increasing its population by nearly 50 percent. Other areas with significant growth are metros located along the Mexico border, such as McAllen, Brownsville, and Laredo. One of the fastest growing regions in the state, the Lower Rio Grande Valley, houses two adjacent metros - McAllen and Brownsville. Together they added 261,025 people between 1990 and 2000 - about the same as the increase for the entire San Antonio metro area during the same period. Dallas-Fort Worth-Arlington, Houston-Sugar Land-Baytown, San Antonio, Austin-Round Rock, El Paso, and McAllen-Edinburg-Mission are all on the Census Bureau's latest nation’s 100 most populous metropolitan statistical areas list based on July 2006 population estimates. According to the most recent population projections from the Texas State Data Center, Texas' population was 23,047,143 in January 2006 and is expected to reach 35.76 million by 2040. This is based on a statewide annual rate of growth of approximately 1.5 percent; slower than 1990-2000 but still substantial growth given the 2000 population base of 20.85 million. Hispanics will account for most of this growth and are expected to outnumber Anglos in Texas by 2020. These projections are based on the State Data Center's "0.5" 1 migration scenario, which is the one indicated as "most appropriate...for use in long-term planning." In 2005, Texas became the fourth "majority-minority" state, with a minority population comprising 50.2% of its total population, according to U.S. Census Bureau population estimates.

Employment Performance

Texas employment gained 218,600 total seasonally adjusted nonagricultural jobs in 2007 for an annual growth rate of 2.1 percent, more than double the national growth rate of 1.0 percent. The state’s job growth rate led the nation in 2007. Professional and Business Services ranked first in job creation with a gain of 59,000 jobs in 2007 for an annual growth rate of 4.7 percent. Next was Education and Health Services with 29,100 new jobs. Manufacturing employment levels fluctuated up and down throughout the year, ending with a loss of 6,300 jobs, representing a -.7 percent decrease. Reviewing February 2008 data on the Texas labor market, which incorporates required revisions following the Bureau of Labor Statistics methodology, the state’s total civilian labor force stood at almost 11.6 million people in December 2007 in seasonally adjusted numbers. Recent Southwest Economy analysis from the Federal Reserve Bank of Dallas confirms that Texas employment growth continued to outpace the nation in 2007. The Federal Reserve estimates that Texas employment grew 3.1 percent while the nation’s employment grew only 1 percent in 2007. Roughly 7.6 percent of the nation’s 2007 nonagricultural workforce was in Texas, the state created 31 percent of the country’s nonagricultural jobs. Texans continue to be one of the state’s biggest assets, with the state’s rapid population growth providing the labor necessary for strong job growth. Most Texas’ major sectors added workers throughout 2007. The manufacturing sector was the exception.

Employment - Current Situation The Texas economy enjoyed strong non-farm job gains in 2007. According to the latest Current Employment Statistics from the Texas Workforce Commission, the state gained 218,600 nonagricultural jobs from December 2006 to December 2007. According to the Bureau of Labor Statistics, Texas posted the second largest over-the year jobless rate decline of -.6 percent in 2007. Texas Workforce Commission data indicate that the state’s seasonally adjusted unemployment rates were lower than the national average throughout most of 2007, falling to just over 4 percent in January 2008. 2007 Texas job growth was so strong that some companies reported problems finding qualified skilled labor.

Industry Trends

For the third quarter of 2007, venture capitalists in Texas invested primarily in the Texas industrial/energy, software, networking and equipment, and semiconductors. The BIDC Industry Portfolio area has detailed information about 27 Texas industry breakouts. There are also state Industry Employment Snapshots provided by the Texas Workforce Commission.

Research and Development

Several Texas universities and research institutions are leaders in electronics, medical, biotechnology, aerospace, advanced materials, and energy-related research. Data from the U.S. Patent & Trademark Office indicate that in fiscal year 2006 Texas residents were issued 6,345 patents and in fiscal year 2005 Texas residents filed 13,903 patent applications, ranking the state second in the nation in both categories behind California. In 2006, Texas was ranked third in the nation for academic R&D expenditures by state by the National Science Foundation with approximately $3.1 billion spent.

Income

The Texas economy continued to grow in 2007, while the national economy slowed, spurred by heavy demands for energy and supported by an economy that is increasingly globally integrated. Texas personal income rose an annual average of 8.2 percent in 2006, the latest annual data available, while the first three quarters of 2007 show continued steady increases. The latest State Comptroller income data available also show increases in Texas 2006 personal income. Third Quarter 2007 BEA data, the latest available, indicate that Texas ranked eighth in the nation for personal income.

Real Estate

In 2007, despite the national downturn, Texas’ real estate performance was strong. The state’s home prices increased 6.9 percent during first quarter 2007, well above the 4.3 percent national average. Low interest rates and taxes, job growth, a growing population, and the continued affordability of Texas housing are helping to drive residential housing construction and purchases. Texas residential housing permits data indicate a 3.06 percent increase in 2006 and also show a recent decline from the peak levels in 2005. The Texas A&M Real Estate Center predicts that while national home prices are expected to drop, Texas as a whole should avoid a decline in home prices. The Texas Real Estate Market Reports from the Real Estate Center at Texas A&M University provide detailed information about the 25 Texas Metropolitan Statistical Areas.

Transportation

Texas’ central location facilitates in providing timely access to national and international markets via air, rail, roads, and water. Texas has over 304,000 miles of public roads, which is more than any other state. Texas’ railroad system was nationally top ranked in 2005, with 44 railroads (#2) operating on 10,386 rail miles (#1) carrying 384.4 million rail tons (#5). Texas has thirteen deep water ports with channels at least 30 feet deep along the Gulf Coast. They include The Port of Houston, which is top ranked first in the nation for waterborne commerce, and ranks second in the nation and 14th in the world for total tonnage. The state’s two largest airports, Dallas-Fort Worth International (DFW) and George Bush Intercontinental in Houston (IAH), serve as major hubs for connecting flights within the domestic and international air systems. International 2006 airline passenger data indicate that DFW ranked 6th and IAH in Houston ranked 16th for total passengers served. International border crossings between Texas and Mexico rank among the busiest in the United States. In 2007, Texas handled over 3.1 million incoming and over 2.7 outgoing trucks. Laredo had the most incoming and outgoing traffic. In 2007, Texas handled 259,599 incoming and 293,838 outgoing rail crossings. Laredo had the most incoming and outgoing traffic. In 2007, Texas handled just over 32 million incoming and 26.6 outgoing personal vehicles. McAllen had the most incoming traffic and Laredo had the most outgoing traffic. In 2007, Texas handled over 17.8 incoming and over 14.1 outgoing pedestrian crossings. El Paso had the most incoming and outgoing traffic.

Gross State Product

The Texas gross state product (GSP) for fiscal year 2007 was $1,116.81 billion in current dollars, according to the Texas Comptroller of Public Accounts. If Texas were a nation, its economy would rank as the tenth largest in the world by Gross Domestic Product, according to the latest 2007 Comptroller's estimates. Since the 1986 recession, the Texas economy has been steadily diversifying.

International Trade

In 2007, for the sixth year in a row, Texas was ranked as the number one state by export revenues. Texas exports for 2007 totaled $168.16 billion, which is approximately $17.3 billion more than 2006 and represents an 11.45 percent increase. Recent Texas exports information indicate steady increases in exports in 2007. The state's top value-added Texas exports in 2007 were Chemicals, Computer & Electronic Products, Machinery (not electrical), Transportation Equipment, and Petroleum & Coal Products. Total 2007 exports for the United States increased over 12.11 percent to $1.16 trillion from $1 trillion in 2006. The countries Mexico and Canada, followed by the Asian Pacific countries China and South Korea were the leading destinations for Texas exports in 2007. The state’s largest export market continued to be its NAFTA trading partners, which accounted for approximately 43.4 percent of total state exports during 2007. Mexico continued as the top export destination with $56 billion in Texas exports, representing a 2 percent increase from $54.8 billion in 2006. Canada ranked second with $16.8 billion, representing a 7.5 percent increase from $15.6 billion in 2006. China ranked third at $8.3 billion, representing a 24.5 percent increase from $6.6 billion in 2005. Korea ranked fourth at $5.5 billion, a 4.2 percent increase from $5.3 billion in 2006. The Netherlands ranked fifth at $5.3 billion with a 19.7 percent increase from $4.4 billion in 2006. In 2007, Port Level data from the Bureau of Economic Analysis indicated overall Texas Port Level imports totaled approximately $287.1 billion, an increase of approximately 8.5% from $245.2 billion in 2006. Energy (38%), miscellaneous machinery (17%), and telecom and high technology equipment (12%) were the top ranked commodities in the 2007 Texas Port Level imports. 2007 Texas Imports for the top 10 countries of origin accounted for $223.6 billion – or 81% of Texas imports. NAFTA trading partner, Mexico, was the top country of origin for Texas imports with approximately $141.1 billion in imported goods – or 49% of Texas imports. NAFTA trading partner, Canada, does not rank in the top 10 for Texas imports, in striking contrast to its number two ranking for Texas exports in 2007. In 2007, Texas ranked first nationally by foreign direct investment (FDI) with over $14.9 billion invested into the state, according to OCO Consulting. Texas also ranked third nationally by FDI jobs, with 14,889 jobs created, and third nationally by FDI projects, with 117 projects created.

Labor and Management Diversity

The value of sales and receipts of minority-owned firms in Texas reached $1.81 trillion in 2002, up from $1.41 trillion in 1997. (2002 is the latest year these data are available from the Economic Census, which is produced every five years). 2002 Economic Census data were released from 2004 through 2006.) There were 1,734,648 minority owned firms in 2002, up from 1,525,972 in 1997. These firms employed 8,059,889 in 2002, up from 7,074,209 in 1997. Major breakouts follow. In 2002, there were 319,340 Hispanic-owned firms in Texas, up 33 percent from 240,396 firms in 1997. Sales and receipts rose 7 percent from $39.48 billion in 1997 to $42.21 in 2002. Texas ranked second nationally for the number of firms and sales and receipts of Hispanic-owned firms. One in five U.S. Hispanic-owned firms calls Texas home. Three of the top MSAs with the largest number of Hispanic-owned firms – Houston-Baytown-Huntsville (#3), Dallas-Fort Worth (#5), and Brownsville-Harlingen- Raymondville (#9) – and three of the top counties with the largest number of Hispanic-owned firms – Harris, Hidalgo, and Bexar – are in Texas. In 2002, there were 88,769 Black-owned firms in Texas, up 47 percent from 60,427 firms in 1997. Sales and receipts declined 2 percent from $6.85 billion in 1997 to $6.69 billion in 2002. Texas ranked third nationally for sales and receipts and fifth nationally

for the number of firms of Black-owned firms. In 2002, there were 469,049 women-owned firms in Texas, up 23 percent from 381,453 firms in 1997. Sales and receipts rose 3 percent from $65.1 billion in 1997 to $66.7 billion in 2002. Texas ranked third nationally for the number of firms and sales and receipts of women-owned firms. In 2002, there were 78,018 Asian-owned firms in Texas, up 32 percent from 59,318 firms in 1997. Sales and receipts rose 24 percent from $18.22 billion in 1997 to $22.62 billion in 2002. Texas ranked third nationally for the number of firms and sales and receipts of Asian-owned firms. In 2002, there were 16,863 Native American-owned firms in Texas, up 8 percent from 15,668 firms in 1997. Sales and receipts rose very slightly from $3.32 billion in 1997 to $3.321 billion in 2002. Texas ranked third nationally for the number of firms and second nationally for sales and receipts of Native American-owned firms. In 2002, there were 1,543 Pacific Islander-owned firms in Texas, up 70 percent from 908 firms in 1997. Sales and receipts greatly declined from $624 million in 1997 to $277 million in 2002. Texas ranked fifth nationally for the number of firms and third nationally for sales and receipts of Pacific Islander-owned firms.

Looking Ahead…

·                    conomic growth that exceeds the U.S. average.

·                    Stronger business ties to the far corners of the world.

·                    An older and more ethnically diverse population.

In short, this is the future of the Texas economy in the coming years, most analysts and experts conclude. For a detailed statistical overview of the long-term outlook for the State of Texas, see the most recent state economic forecast from the Texas Comptroller of Public Accounts and the most recent state population projections from the Texas State Data Center.

Office of the Texas Govenor 

Last updated: April 1, 2008