​Texas lost jobs in October and faces major headwinds with a weak U.S. economy and a poor performance by this year’s 88th Legislature. There is a better way.

• This included the largest spending increase, largest corporate welfare increase, largest amount passed in constitutional amendments, and subsequent second-largest property tax cut in the state’s history.
• Texas has yet to pass universal education savings accounts during the ongoing fourth special session called by Gov. Greg Abbott (R), and likely will not pass them until at least 2025.
• Texans expect more from the largest red state in the country.

 
Free-market capitalism is the best path to let people prosper, as it is the best economic institution that supports jobs and entrepreneurship for more people to earn a living, gain skills, and build social capital.
 
Table 1 shows Texas’ labor market for October 2023 from the U.S. Bureau of Labor Statistics. These data compare the following important dates: 1) June 2009—Dated trough of that U.S. recession, 2) February 2020—Dated peak of the last U.S. expansion before the COVID-19 shutdowns, 3) April 2020—Dated trough of the last U.S. recession, and 4) October 2023—Latest data available.

​The labor market declined last month continuing a weakening trend in Texas.

• The payroll survey shows net nonfarm jobs in Texas declined by 1,300 last month, resulting in the first decline after employment increases in 40 of the prior 41 months. This brings employment down to 14.04 million, breaking the streak of record highs for 24 straight months.
• Compared with a year ago, total employment was up by 391,500 (+2.9%)—the third fastest growth rate in the country—with the private sector adding 339,400 jobs (+2.9%) to 11.98 million and the government adding 52,100 jobs (+2.6%) to 2.07 million.
• Figure 1 shows that inflation-adjusted average weekly earnings are increasing in some industries in Texas, with inflation still running hot at least at 3.2%. Many Texans are struggling to keep up with less purchasing power from excessive spending by Congress, excessive regulations by President Biden, and excessive money printing by the Federal Reserve. But these are exacerbated by excessive state and local spending, high local property taxes, restrictive local zoning, and other factors in Texas.

​

• The household survey shows that the labor force participation rate is higher and the employment-population rate matches those in February 2020, but the former is well below December 2007 at the start of the Great Recession.
• The state’s unemployment rate of 4.1% is higher than the U.S. rate of 3.9% but this is a weak indicator as it’s highly volatile based on changes in the labor force, and the labor force continues to increase in Texas unlike in many states.
• Shortages in the labor market are across the economy as many still sit on the sidelines from profligate safety nets primarily from the federal government over the last three years.

 
The economy continues to expand in Texas though there are headwinds.

• The U.S. Bureau of Economic Analysis (BEA) reported the real gross domestic product (GDP) by state for 2022.
• Figure 2 shows Texas had the fifteenth fastest real GDP growth of +3.0% to $1.94 trillion in 2023:Q1 (above the U.S. average of +2.0% to $20.28 trillion). 

​

• The BEA also reported that personal income in Texas grew by 6.7% to $1.94 trillion in 2023:Q1 which was the 22nd highest in the country. This is above the U.S. growth rate of 5.1% (to $22.51 trillion).

 
As Texans face an affordability crisis from high inflation and high property taxes and an uncertain future with the U.S. economy likely in a deepening recession, the Legislature provided some tax relief but not nearly enough because of excessive spending.

• Other states are cutting, flattening, and phasing out taxes, passing responsible budgets, and passing school choice, so Texas should have made bold reforms to support more opportunities to let people prosper, mitigate the affordability crisis, and withstand destructive policies out of D.C.
• Figure 3 provides a comparison of the size of government, economic freedom, and economic outcomes among the four largest states and nearby Louisiana. 

• While Texas does relatively well, there is much more to do for more liberty and prosperity.

The Texas Legislature should improve the Texas Model by:

• Passing pro-growth policies that:
  • Spend Less: Lower state government spending and pass responsible local spending limits.
  • Tax Less: Start eliminating local property taxes with historic surpluses at the state level to buy down school district M&O property taxes and at the local level by using their own surpluses to buy down their own property tax rates.
  • Regulate Less: Improve workforce development, remove barriers to work, reduce occupational licensing, reform safety nets, and enact universal school choice.

 
Strengthening the Texas Model will help Texans better resist D.C.’s overreach, be more competitive with other states, and, more importantly, flourish more for generations to come.
​

Our new report highlights Louisiana’s economic situation based on the most recent data. The report is based on several key factors that indicate how the economy, labor market, and public policy influence the lives of everyday Louisianans. While some of these data indicate a relatively strong labor market–such as the historically low unemployment rate–there are underlying factors showing Louisiana’s economic struggle.

Our Louisiana Comeback will happen through reforms that remove government barriers, bring jobs and opportunity back to Louisiana, and let people prosper. We must decide: Will we continue to hold on to the status quo (which hasn’t done us any favors), or will we embrace the significant reforms necessary to bring jobs and opportunity to Louisiana? We need the latter.

Read the full two-pager: Economic Report Oct 2023 

Originally published by Pelican Institute.​

​At first glance, you might think that Louisiana’s economy is doing great. After all, the state’s September 2023 jobs report shows record lows for the unemployment rate at 3.3% and and people unemployed at 67,930.
 
Louisiana Governor John Bel Edwards cheered these data in a press release:
 
“Louisiana continues to set records for low unemployment. We’ve had 30 consecutive months of job growth and have added nearly 280,000 jobs since the worst of the pandemic. In fact, our employment levels are now higher than they were before COVID. Experts believe that our bipartisan work to grow and diversify our economy will benefit Louisiana for years to come. Economist Dr. Loren Scott recently predicted that Louisiana will add more than 80,000 jobs over the next two years. And we’ve done it all while overcoming historic natural disasters and a state government budget crisis. I have never been more optimistic about Louisiana than I am today.”
 
But does what you hear in the media or by some politicians match reality? Let’s dive into the data to see how things are going for Louisianans.
 
We should know that the Pelican State has many fantastic resources but too many failed public policies that keep Louisianans from reaching their full potential. This has been the case for a while, but most recently, the jobs reports indicate slowing employment growth and a declining labor force. Work matters, as it brings about dignity and self-sufficiency and leaves fewer people needing help from government safety net programs. These data below show that while the labor market data can look good on the surface, there are many real problems facing Louisianans that need to be addressed by state leaders. Fortunately, the Pelican Institute’s “Comeback Agenda,” including our fiscal reform plan, supports ways to overcome these challenges.
 
Here are key issues in Louisiana’s economy.
 
Table 1 provides Louisiana’s labor market data for important dates from the U.S. Bureau of Labor Statistics. These dates are December 2007, when the Great Recession started; February 2020, when the last expansion peaked before the COVID-19-related shutdowns; April 2020, when the shutdown recession ended; and September 2023, for the latest data available.

​Another weakness is economic growth.
 
Table 2 shows how the U.S. and Louisiana economies performed since 2020, as reported by the U.S. Bureau of Economic Analysis. 

​The steep declines were during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered most. Figure 2 shows how the increase in real GDP in Louisiana of +1.4% in Q1:2023 ranked 31st in the country to $289.9 billion, after an annual decline in economic output by -1.8% in 2022 which was the second worst in the country.

The BEA also reported that personal income in Louisiana grew at an annualized pace of +6.2% (ranked 27th) to $258.5 billion in Q1:2023 (above +5.1% U.S. average). There was personal income growth of 0.0% in 2022, ranking 50th of the states.
 
Compared with neighboring states based on several measures there continue to be major concerns in Louisiana (see Table 3). 

​Bottom Line: Louisiana’s economy is weak when it comes to the labor market and economic growth and when compared with other states. Bold, transformational reforms can unleash the potential of Louisianans and make the state more competitive.

• There was an irresponsible budget passed in 2023 that excessively grew spending, busted spending caps in FY23 and FY 24, and didn’t provide tax relief even with billions in excess tax revenue.
• Given these results, there will not be improvements in the state’s poor business tax climate, net outmigration of Louisianans, or Louisiana having one of the highest poverty rates in the country—unless pro-growth reforms are enacted soon.
• The Pelican Institute’s “Comeback Agenda” that encourages spending restraint, tax reform, regulatory relief, education freedom, a revamp of workforce and social safety net programs, and more, would provide opportunities to enable people to prosper.
• This is not only what Louisiana needs; it’s what Louisianans want, according to a recent poll.

Originally published at Pelican Institute. 

​Texas has been a leader in job creation. But Texas faces major headwinds as this year’s 88th Legislature has looked more like California than what Texans expect. There is a better way.

• This included the largest spending increase, largest corporate welfare increase, and subsequent second-largest property tax cut in the state’s history.
• Texas should pass universal education savings accounts the ongoing third special session called by Gov. Greg Abbott (R).
• Texans expect more from the largest red state in the country.

Free-market capitalism is the best path to let people prosper, as it is the best economic institution that supports jobs and entrepreneurship for more people to earn a living, gain skills, and build social capital.

​The labor market continues to improve in Texas even as there are some weaknesses.

• The payroll survey shows net nonfarm jobs in Texas increased by 61,400 last month, resulting in increases for 40 of the last 41 months, to bring record-high employment to 14.05 million. Texas has set a record high in total nonfarm employment for 24 straight months.
• Compared with a year ago, total employment was up by 435,800 (+3.2%)—the second fastest growth rate in the country—with the private sector adding 372,900 jobs (+3.3%) to 11.98 million and the government adding 62,900 jobs (+3.1%) to 2.07 million.
• Figure 1 shows that inflation-adjusted average weekly earnings are increasing in most industries in Texas, with inflation still running hot at least at 3.7%.

​

• The household survey shows that the labor force participation rate is higher and the employment-population rate matches those in February 2020, but the former is well below December 2007 at the start of the Great Recession.
• The state’s unemployment rate of 4.1% is higher than the U.S. rate of 3.8% but this is a weak indicator as it’s highly volatile based on changes in the labor force, and the labor force continues to increase in Texas.
• Shortages in the labor market are across the economy as many still sit on the sidelines from profligate safety nets primarily from the federal government over the last three years.

The economy continues to expand in Texas though there are headwinds.

• The U.S. Bureau of Economic Analysis (BEA) reported the real gross domestic product (GDP) by state for 2022.
• Figure 2 shows Texas had the fifteenth fastest real GDP growth of +3.0% to $1.94 trillion in 2023:Q1 (above the U.S. average of +2.0% to $20.28 trillion).

​

• The BEA also reported that personal income in Texas grew by 6.7% to $1.94 trillion in 2023:Q1 which was the 22nd highest in the country. This is above the U.S. growth rate of 5.1% (to $22.51 trillion).

As Texans face an affordability crisis from high inflation and high property taxes and an uncertain future with the U.S. economy likely in a deepening recession, the Legislature provided some tax relief but not nearly enough because of excessive spending.

• Other states are cutting, flattening, and phasing out taxes, passing responsible budgets, and passing school choice, so Texas should have made bold reforms to support more opportunities to let people prosper, mitigate the affordability crisis, and withstand destructive policies out of D.C.
• Figure 3 provides a comparison of the size of government, economic freedom, and economic outcomes among the four largest states and nearby Louisiana.

​

• While Texas does relatively well, there is much more to do for more liberty and prosperity.

The Texas Legislature should improve the Texas Model by:

• Passing pro-growth policies that:
  • Spend Less: Lower state government spending and pass responsible local spending limits.
  • Tax Less: Start eliminating local property taxes with historic surpluses at the state level to buy down school district M&O property taxes and at the local level by using their own surpluses to buy down their own property tax rates.
  • Regulate Less: Improve workforce development, remove barriers to work, reduce occupational licensing, reform safety nets, and enact universal school choice.

Strengthening the Texas Model will help Texans better resist D.C.’s overreach and flourish more for generations to come.

Originally published at Texans for Fiscal Responsibility. 

​Highlights

• We need more free-market capitalism in America, which is the best way to let people prosper.
• Big government policies in D.C. have resulted in a dire economic situation for Americans.
• Find out how and what to do about it in this economic brief.

​Overview

• Government failures drove the “shutdown recession” and the stagflationary period over the last few years that has plagued Americans, with more inflationary and recessionary problems coming.
• To overcome these government failures, there should be pro-growth policies of less spending by Congress, less regulation by the Biden administration, and less money printing by the Fed.

Labor Market
​The Bureau of Labor Statistics recently released its U.S. jobs report for April 2023, which was another mixed report with some strengths but many weaknesses.

• The establishment survey is the most reported. It shows there were +336,000 net nonfarm jobs added in August to 156.9 million employees, which has increased by +3.2 million over the last year and +4.5 million since February 2020. However, there continue to be large revisions for previous months as the data used for seasonal adjustments are from the last few years when there was substantial volatility in the labor market. Over the last month, there were +263,000 jobs added in the private sector and +70,000 jobs added in the government sector. Most of the private sector jobs were added in the sectors of leisure and hospitality (+96,000) and private education and health services (+70,000), which are low-paid jobs and dominated by government-related jobs. But both information and transportation and warehousing have lost jobs over the last year. There is also a concern with more part-time jobs and not as much of an increase in full-time jobs.
• The household survey increased by just +86,000 jobs in August to 161.6 million employed. There have been declines in net employment in three of the last 12 months for a total increase of +2.7 million since October 2022 and +2.8 million since February 2020, which is well below the jobs added in the establishment survey for many reasons. The official U3 unemployment rate remained at 3.8%, and the broader U6 underutilization rate declined to 7.0%. Since February 2020, the prime-age (25-54 years old) employment-population ratio is up by 0.3-percentage point to 80.8%, the prime-age labor force participation rate was 0.5-percentage at 83.5%, and the total labor-force participation rate was 0.5-percentage-point lower at 62.8% with millions of people out of the labor force holding the U3 rate artificially low.

Economic Growth
The U.S. Bureau of Economic Analysis recently released the third estimate for economic output for Q2:2023.

• Table 1 provides data over time for real total gross domestic product (GDP), measured in chained 2012 dollars, and real private GDP, which excludes government consumption expenditures and gross investment.

​The latest indicator of this concern is U.S. real GDP was revised lower to just a 2.1% increase last quarter. Moreover, previous quarters were revised lower and there continue to be indications of a recession in early 2022 from two consecutive quarters of declining economic activity and relatively weak thereafter. Another measure of economic activity is the real average of GDP and GDI which accounts for domestic production and income. It increased by just 1.4% to $22.1 trillion. This important measure has declined in half of the last six quarters, increasing this value by only 1.2% since the first quarter of 2022, which is likely when the recession started.
​
Meanwhile, the federal budget deficit is growing faster because of overspending and declining tax collections from a weak economy (See Figure 2). The national debt has ballooned to $33.5 trillion, and net interest payments on the debt will soon be a top federal expenditure of at least $1 trillion. Adding to these fiscal challenges are other large, unnecessary expenditures of taxpayer money.

​The Fed has monetized, or printed, much of the new debt to keep interest rates artificially lower than where the market would have them. This created higher inflation as there was too much money chasing too few goods and services. And this has been exacerbated as production has been overregulated and overtaxed and workers have been given too many handouts. The Fed will need to cut its balance sheet (total assets over time) more aggressively if it is to stop manipulating markets (see this for types of assets on its balance sheet) and persistently tame inflation.
​
The current annual inflation rate of the consumer price index (CPI) has been cooling since a peak of +9.1% in June 2022 but remains elevated at 3.7% in September 2023, which remains too high as are other key measures of inflation. Just as inflation is always and everywhere a monetary phenomenon, deficits and taxes are always and everywhere a spending problem. David Boaz at Cato Institute has noted how this problem is from both Republicans and Democrats (See Figure 3).

​In order to get control of this fiscal crisis which is contributing to a monetary crisis, the U.S. needs a fiscal rule like the Responsible American Budget (RAB) with a maximum spending limit based on the rate of population growth plus inflation. This was recently released as part of Americans for Tax Reform’s Sustainable Budget Project. If Congress had followed this approach from 2003 to 2022, Figure 4 shows tax receipts, spending, and spending adjusted for only population growth plus chained-CPI inflation. Instead of an (updated) $19.0 trillion national debt increase, there could have been only a $500 billion debt increase for a $18.5 trillion swing in a positive direction that would have substantially reduced the cost of this debt to Americans. The Republican Study Committee recently noted the strength of this type of fiscal rule in its FY 2023 “Blueprint to Save America.” And to top this off, the Federal Reserve should follow a monetary rule so that the costly discretion stops creating booms and busts.

​Bottom Line
​The stagflationary destruction will continue given the “zombie economy” and the unraveling of the banking sector which will hit main street hard. Instead of passing massive spending bills, the path forward should include pro-growth policies that shrink government rather than big-government, progressive policies. It’s time for a limited government with sound fiscal and monetary policy that provides more opportunities for people to work and have more paths out of poverty.

Recommendations:

• Set a pro-growth policy path with less spending, regulating, and taxing at all levels of government, which includes return-to-work policies.

• Reject new spending packages that America cannot afford nor needs; pass the RAB instead.
• Impose a strict monetary rule with the Fed having a much smaller balance sheet and a much higher federal funds rate target until we End the Fed.

This was originally posted at Texans for Fiscal Responsibility.