|Texas Quarterly Commercial Report||Texas Quarterly Commercial Report||James P. Gaines, Luis B. Torres, Harold D. Hunt, Clare Losey, Carter Neill, and Trenton Forbes||2019-06-04T05:00:00Z||technical-report||Commercial|
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First Quarter 2019
The Texas economy slowed at the beginning of 2019 in the midst of one of the longest expansionary cycles in recent history. Entering the ninth year of the business-cycle expansion, payroll employment grew at a steady pace, and unemployment remained historically low. Crude oil prices elevated to more than $60 per barrel and supported record-level crude oil production and export volumes. The Texas economic expansion is poised to continue throughout 2019. The trade war with China looms as a major potential headwind going forward. For additional commentary and statistics, see Outlook for the Texas Economy at recenter.tamu.edu.
The overall strong performance in the Texas economy translates into a positive outlook for the commercial real estate sector. The Texas Nonresidential Coincident Index, which measures current construction activity, indicates growth accelerated as nonresidential construction values increased in 1Q2019. However, the Texas Nonresidential Leading Indicator, which measures potential future construction activity, indicates growth may slow going forward. See Figures 1-5 for the Nonresidential Coincident Index and Leading Indicator for Texas and the four major metros.
Austin's overall economic activity moderated in 1Q2019 even as job growth continued its upward trend and wage growth rose. Employment continued to climb in Dallas-Fort Worth (DFW) with the services sector leading job growth. In Houston, the overall outlook remains positive, supported by higher oil prices and a strong U.S. economy, although at a slower pace than during the oil boom. San Antonio's job growth improved in 1Q2019, after slowing at the end of 2018.
The outlook for the rest of 2019 appears to be positive for the major Texas MSAs due to the strength of the U.S. and Texas economies. As oil prices jumped in 1Q2019, Texas' fundamental economic factors appear to provide a positive tailwind moving forward. Interest rates should continue to remain low as inflation pressure remained subdued. On the negative side, a declining trade environment remains the greatest headwind to the Texas economy, challenging some of the state's most productive industries. Although Mexico, Canada, and the U.S. announced official trade agreements, the agreements need approval from each country's legislative branches. The U.S. economy has shown signs of slowing in 2019 as the effects of the 2018 fiscal stimulus dilute.
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|Digital and Print||2211||https://www.recenter.tamu.edu/articles/technical-report/Texas-Quarterly-Commercial-Report|| https://assets.recenter.tamu.edu/Documents/Articles/2211.pdf|