While most of the 50 states remain mired in economic stagnation, numerous journalists, think-tankers and economic indicators are bullish on the seemingly bullet-proof Texas economy. Local officials have taken pains to present their cities as business friendly, and the influx of new residents has bolstered some areas at a time when Americans are leaving expensive Florida or California locales. Has the case for the Lone Star state been exaggerated, or do they truly have "something special" going on? Pundits weigh in:
Texas Is Rising While California Slumps observes CNN/Fortune's Kit R. Roane, in an article that appears to have kick-started the recent Texan prognoses. The state has an ideal combination of low taxes, friendly business districts, diversity of jobs and lax regulations that California (called the "the Venezuela of North America" by Chief Executive) lacks. The writer ventures: "Texas powered through the global fiscal crisis, while The Golden State's economy is forecast to remain tarnished for some time."
No State Is Thriving Like Texas reports The Atlantic's Derek Thompson, who outlines four reasons why the state is "dominating" the economic doldrums. 1) Texas was seeing a quiet energy boom as the recession began in 2008, so it's a late comer to the recession. 2) The state's real-estate prices have largely remained stable. 3) Texas's big cities have a diverse mix of industries that power the local economy. 4) It's got that special something: "Maybe it's the lack of a state income or capital gains tax. Or the dearth of union workers."
The Lone Star Is Unmatched in General Resiliency writes Ryan Avent at The Economist, who agreed with many factors that Thompson listed with some caveats: "Take a tech-oriented region like Greater Boston or the Bay Area, subtract out a housing collapse and add in an energy boom, and I suspect you've covered most of the discrepancy in performance. Concerning the 'Something About Texas' factor, I'd also note that success has probably been self-reinforcing. A stable, cheap housing market and a relatively robust job market has likely acted as a magnet for migrants from other areas—especially the Midwest and South."
The 'Miracle' Is Semi-Mythical blogs Matthew Yglesias at ThinkProgress, who expands on Ryan Avent's post and Thompson's article: "I’d go stronger than this. If instead of comparing states you compare metropolitan areas, you sort of wonder where this miracle is. Here’s unemployment by metropolitan area. How’s Greater Boston doing? Well, they’re at 8.2 percent and faring better than Texas’ large Dallas and Houston metro areas...States, for better or for worse, aren’t real economic units. So state-level statistics often represent somewhat meaningless aggregation effects."
Texas Has Avoided the Recession, So Far explains Professor Wendell Cox at New Geography. Although Texas has avoided the fate of its "primary competitors" California and Florida, there still are threats looming that may bog down the state's economic fortunes. "Yet, despite the success of the less restrictive land use policies in Texas, there are strong efforts there to impose more smart growth policies. The impact could be devastating, especially from strategies that ration land that would raise land and house prices, as has occurred in California and Florida...Federal initiatives, under proposed climate change and transportation acts could do much to destroy not only the affordability of Texas metropolitan markets, but could also make Texas less competitive in the decades ahead."