Economic Analysis | Amarillo National Bank

Economic Analysis

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May 2020

All sectors of our economy have benefited from the rebound the last few months throughout Texas. Retail sales, vehicle sales, tourism, construction, and commodities are all sharply higher. Comparisons with last year are less important than comparing two years ago (to see if we are back to normal).

Retail sales are up 31% for the month from 12 months ago and 21% from 24 months ago. Year to date sales are up 10% compared to 2020 and 13% compared to 2019. New car sales have more than doubled, up 111% and used car sales are up 143% and 44% from 2 years ago. Area car dealers say the lack of inventory is going to have a negative effect on the 2nd half of the year.

Employment levels remain about the same as last month, but up sharply from last year. 14,000 people in Amarillo have rejoined the workforce. 9,000 more are working according to the Employers’ Survey; while 19,000 more are employed in the Household Survey (which includes part time jobs). The Household Survey is still down 900 from 2 years ago and the Labor Force is flat with 2019. Wages are up 6% from last year and 13% from 2 years ago.

Airline boardings are up 67% from a year ago, but down 20% from 2019, as our Airport has lost flights. The Hotel/Motel Tax Collections are up 72% from last May and 7% from 2 years ago. Amarillo is the only city in Texas with higher hotel rates than 2 years ago.

Construction is leveling off in residential and commercial, but YTD Building Permits are still much higher due to the Amazon warehouse. Mortgage rates remain below 4% and residential starts are level with a year ago and year to date starts are up 9% and 23% from 2 years ago.

Commodities have rebounded (see our White Paper on Inflation). Wheat is up 53% to $7 and corn is up 91% to $6.53. Recent rains will help all summer crops, but was too late for much of the wheat. Feedyards are operating slightly below breakeven, even though cattle prices are up 10%. Dairies are profitable with milk at $17, but margins are thin and higher input costs (see above: corn) will squeeze margins.

 

 May 2020

Current Month

Last Month

Last Year

 Index*

200.03

184.00

149.00

 Sales Tax Collections

$9,200,441

$5,822,908

$7,054,758

 Sales Tax Collection-YTD

$36,697,521

$27,497,080

$33,350,058

 New Vehicle Sales

950

722

450

 Used Vehicle Sales

2,491

1,980

1,022

 Airline Boardings

24,323

21,931

14,603

 Hotel/Motel Receipt Tax

$692,199

$487,765

$402,823

 Population - Corporate Amarillo

191,514

191,514

191,514

 Employment - CLF

132,879

133,761

132,533

 Unemployment Rate

4.00%

4.80%

2.10%

 Total Workers Employed (Household Survey)

127,512

127,275

129,727

 Total Workers Employed (Employers Survey) 

120,100

120,340

120,900

 Average Weekly Wages

$1,013.50

$896.50

$955.84

 Gas

69,764

70,029

66,963

Interest Rates: 30 Year Mortgage Rates

3.250%

3.375%

3.375%

 Building Permits Dollar Amount

$41,523,216

$21,125,470

$62,698,906

 Year to Date Permits

$241,544,035

$195,420,389

$141,816,849

 Residential Starts

45

26

44

 Year To Date Starts

175

117

160

 Six Months Trailing

$288,704

$262,320

$166,604

 Median House Sold Price

$217,000

$211,500

$182,000

 Drilling Rigs In Panhandle

3

5

0

 Oil Price Per Barrel

$65.59

$63.12

$27.50

 Natural Gas

$3.04

$2.66

$1.67

 Wheat Per Bushel

$7.00

$6.54

$4.59

 Fed Cattle Per CWT

$118.86

$120.50

$108.05

 Corn Per Bushel

$6.53

$5.77

$3.41

 Cotton (Cents Per Pound)

$68.50

$72.10

$57.60

Milk

$17.00

$17.59

$12.50

*Base-100, January 1988

This document was prepared by Amarillo National Bank on behalf of itself for distribution in Amarillo, Texas and is provided for informational purposes only. The information, opinions, estimates and forecasts contained herein relate to specific dates and are subject to change without notice due to market and other fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be accurate, complete and/or correct. The information and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, sell or make any other investment decisions.

 

Inflation 2021

Higher prices and inflation are evident almost everywhere (except in Washington D. C.). See the following impacts on inflation:

Inflation 2021

  From 1 year ago  From 2 years ago
Home Prices (Amarillo) +19% +28%
Amarillo Wages +6% +20%
 Used Car Prices  +25% +44% 
Gasoline +42% +10% 
     
Commodities:     
   Corn +91% +70%
   Wheat +52% +70%
   Cattle  +10% -.8% 
   Milk +36% +11% 
   Cotton +18% -.4%
   Copper +46% +41%
   Oil  +138% +2.6% 
   Natural Gas +82% +14% 

 

Cost Push Inflation

Increasing commodity prices are combining with higher labor and transportation costs to put pressure on sellers to raise prices.

Labor Costs are increasing and construction costs are up about 20%. These costs will run through the economy. Gasoline prices are boosting transportation costs, as demand has grown to offset any supply excesses that existed a year ago.

Demand Pull Inflation

Shortages of autos, consumer products, and workers are seen throughout the economy. Several rounds of stimulus checks to individuals, plus the massive amounts of stimulus money given to local and state governments are adding additional demand for the available resources; making it possible for cost increases to be passed along to consumers. Also, the money supply has grown 25%, adding steam to inflationary pressures, as more dollars chase fewer goods.

Several of these increases are coming off of the low levels of last year, but others are true increases from two years ago. The thought that the increases will be temporary would imply that commodity prices must go down and labor cost increases will be offset by productivity increases. This seems like a hard sell.

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