Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Lone Star Stumble the Texas Miracle Is Running out of Gas

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Lone Star Stumble the Texas Miracle Is Running out of Gas

Article excerpt

Remember the Texas economic miracle - one of the main arguments in 2012 from then-Gov. Rick Perry about why he should be president? More broadly, conservatives have long held Texas up as an example of how low taxes on the rich and harsh treatment of the poor are the keys to prosperity.

Well, Texas is looking a lot less miraculous lately.

OK, we're talking about a modest stumble. Still, events in Texas and other states - notably Kansas and California - are demonstrating once again that the tax-cut obsession that dominates the modern Republican Party is all wrong.

For many years, economic growth in Texas has outpaced growth in the rest of America. But that long run ended in 2015, with employment growth in Texas dropping well below the national average and a fall in leading indicators pointing to a further slowdown.

Occasional underperformance is a fact of life. But everything is bigger in Texas, including expectations, so the slowdown has come as a bit of a shock.

There's no mystery about what is happening: It's all about hydrocarbons. Texans like to point out that their state's economy is a lot more diversified than it was in J.R. Ewing's day, and they're right. But Texas still has a disproportionate share of the U.S. oil and gas industry, and it benefited far more than most states from the fracking boom.

About half the energy-related jobs created by that boom since it began in the middle of the last decade were in Texas, and this windfall accounted for about a third of the difference between growth in Texas and in the rest of the country.

What about the other two-thirds? Texas is still benefiting from the long southward shift of America's population that began with the coming of widespread air-conditioning; average January temperature remains a powerful predictor of regional growth. Texas also attracts new residents with its permissive land-use policies, which have kept housing cheap.

But now, one of the three big drivers of Texas growth has gone into reverse, as low world oil prices are bringing the fracking boom to a screeching halt. …

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