AQUA BOOK 2014 - Page 5

The Big Picture interest rates low. The 30-year conventional mortgage rate had fallen to about 3.4 percent by the end of 2012 before gaining one percentage point within the following year. With the U.S. economy back on course, the Federal Reserve announced in last November a cutback on its quantitative easing stimulus program. In response to the Fed’s tapering on its bond buying activities, bond yields and thus most market interest rates are expected to continue to return to their pre-2008 levels. Interest Rates Interest Rates The current shale oil boom in the Eagle Ford began in 2008 with the discovery of Hawkville Field in LaSalle County. Oilfield employment has become a key source of job growth in South Texas. The Eagle Ford has become the leader in oil production growth among all shale plays in the U.S. Only three counties (Bee, Live Oak and McMullen) belong to the Eagle Ford oil and gas production zone. Yet within five years of when the first shale oil well on that play was drilled, oil and gas exploration has already proved to be a game changer for many communities in the Coastal Bend. ment grew at an annualized rate of over 3 percent, more than double the historical average. At the end of 2013, the local unemployment rate dipped to a five-year low of 5.5 percent. Corpus Christi Employment Growth, Corpus Christi Employment Growth, Year-Over-Year % Change Year-Over Year % Change 5.0% 2.5% 0.0% 2008 7 2009 2010 2011 2012 2013 SOURCE: Texas Workforce Commission. 6 5 30-Year Mortgage 4 3 10-Year Treasury 2 1 3-Month T-Bill 0 2008 2009 2010 2011 2012 2013 SOURCE: Federal Reserve System. What Happens in South Texas Stays in South Texas While the national economy is gaining momentum at last, Texas is among those states that are leading the nation in job creation. With half of the nation’s rapidly expanding oil production, the state experienced a strong overall economic growth rate of 4.8 percent in 2012 and 3.6 percent in the following year. The Corpus Christi metro area has witnessed even stronger growth in the past two years. The local economy expanded nearly 7 percent in 2012, followed by a slightly moderate pace of 3.8 percent in 2013. Comparison of Annual GDP Growth Comparison of Annual GDP Growth 8% Corpus Christi Texas “What Goes Around … Comes Around” 2% 2.9% 3.3% Business Cycle Index 110 Texas 105 Corpus Christi U.S. 90 2008 2009 2010 2011 2012 2013 SOURCES: Federal Reserve Bank of Dallas; 2008 2009 2010 2011 -2% SOURCE: Bureau of Economic Analysis. 95 2.4% 0.8% 2012 2013 Unemployment Rate Unemployment Rate 10 U.S. 8 Texas 6 Corpus Christi 4 2 0 2009 2010 2011 2012 2013 SOURCE: Bureau of Labor Statistics. 100 3.8% Historically, Corpus Christi faced the challenge of persistently high unemployment relative to the rest of the state and the U.S. That trend has been reversed ever since 2008. The local unemployment rate is now at least one percentage point below the national average. The unemployment rate for the Coastal Bend region as a whole is even lower, as labor markets are increasingly tighter for those communities closer to oilfields in the Eagle Ford. 2008 Business Cycle Index 6.9% 0% -4% Reversal of Fortunes Movement in the regional economy over time is tied to the changing economic environment in the rest of the world. According to the Business Cycle Index, Corpus Christi followed the state and the nation during the last economic downturn. As a measure of the overall economic condition, the Business Cycle Index for Corpus Christi reflects changes in the level of employment, the unemployment rate, wage earnings and retail sales. South Texas escaped the brunt of the Great Recession of 2007-2009 that has continued to drag much of the global economy. During that period, Corpus Christi experienced less severe economic declines than the rest of the nation. The metro area returned to its pre-recession conditions as early as mid-2011. 6% 4% -2.5% proposed South Texas Economic Development Center By 2012, local businesses in Corpus Christi had added back most of the jobs destroyed during the last economic downturn. Among all months in 2012, employ- Expansion in the Eagle Ford oil and gas drilling activity has been the underlying source of economic growth in South Texas. Oil and gas production has helped boost employment growth by more than 10 percent in Corpus Christi’s mining and construction industries. Local businesses in lodging and food services together have also added 8 percent more jobs as spillover effects from the oil boom. Annual Review of the South Texas Economy – 2014 Edition |