2019 Economic Forecast

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2018 Recap

  • Growth in the Amarillo economy led by retail sales and tourism
  • Job growth about half the previous two years, but wages up
  • Some slowing in Summer for retail sales and Fall for construction
  • Drought hurt Agri-Business

Areas of Economic Strength

  • Wages increased due to a tight job market and good economy
  • Cattle, Dairy, Farming and Oil had steady years
  • Retail Sales improved in the Fall from flat to up 5%
  • CPI was up 3%, as gas prices dropped at year end
  • Tourism up 5%

Areas of Economic Weakness

  • Job Growth slowed. Basically flat in the 4th quarter
  • Tariffs and drought hurt agri-business
  • Oil prices dropped in December, and the Stock Market dropped in December
  • Housing Starts slowed in the Fall due to higher interest rates
  • Total Building Permits were down from the high level of 2017 to a more normal level

2019 Forecast

  • Job growth should be in the 1,600 area (which is less than other West Texas cities)
  • Housing should stay flat and overall construction down from 2018
  • Oil prices should move back towards $60, but natural gas dropping to $3
  • Tourism to stay strong helped by new Ballpark

Outlook for Specific Sectors

Real Estate

2018 home prices and house sales were up 2%, with some flattening in the Fall. Housing starts were up for the 12 months, but dropped in the 4th quarter due to higher mortgage rates (which have since backed off). 2018 saw good sales of existing homes.  Commercial construction was helped by the ball park. 2019 should have housing starts around 450, and commercial construction will be steady, as several big projects finish. Home prices should be up 3%.

Building Permits

2012

2013

2014

2015

2016

2017

2018

 2019 (est)

Housing Starts

527

484

454

406

512

477

505

450

Remodels

2,037

1,536

1,752

1,506

1,213

1,131

 1,040

1,200

Roof Permits

1,141

17,055

6,304

2,260

1,778

3,910

 2,136

1,800

Comm. Units

521

371

512

378

380

506

415

400

Total Value (mil)

$346

$480

$589

$485

$460

$686

 $472

460

Retail Sales

2018 job growth slowed, and retail sales were flat for the first six months, as internet shopping hurt. Overall sales were good, and the 4th quarter saw improvements in all categories. 2019 should have retail sales up at least 3%, as wages have increased and the economy stays at current levels.

Car sales and prices should be up slightly.

Year

2012

2013

2014

2015

2016

2017

2018

2019 (est) 

Sales Tax Collection

 

$65,385,227

$70,744,051

$71,801,582

$74,423,000

$74,412,780

$74,177,530

 $77,261,171

$79,580,000 

+5.8%

+8.2%

+1.5%

+2.9%

-0.00013%

-0.003%

+4.16% 

+3.00% 

Consumer Price Index (Amarillo)

Amarillo prices were up 3%, with increases in groceries and utilities. The national number was a little lower.

CPI Increases 

2012

2013

2014

2015

2016

2017

2018

2019 (est) 

Amarillo

1.50% 1.48% 2.50% 0.58% 1.03% 0.97% 2.90% 3.20%

National

1.7%

 1.7%

 2.2%

 0.5%

1.70%

2.20%

 2.20%

 2.90%

Employment

Wages were up due to the tight job market (2.5% unemployment-2nd lowest in Texas).  Job growth slowed in the last half of 2018. Gains were primarily in construction, education & health and hospitality. The household sector was up slightly on a 12-month average basis, but the employer’s survey was down.  Unemployment remains very low.  2019 should show steady growth in area employment, as major employers see production staying the same.

12 Month Average 

2012

2013

2014

2015

2016

2017

2018

 2019

Household Survey

128,125

 129,385

130,800

125,741

16,825

129,300

129,491

132,000

Employers Survey

114,490

115,750

117,000

 116,975

119,708

123,200

121,616

124,000

Average Unemployment

4.1%

4.7%

4.5%

4.0%

3.1%

2.2%

 2.7%

2.5%

Agri-Business

Tarriffs and drought negatively impacted crop production prices in 2018. Early season drought caused terrible wheat crop and slow start for row crops. Cotton prices impacted and irrigated cotton yields were good.

Cattle price and profits were volatile, with measurable losses during the second and third quarters, but most were profitable for the year. Hedging helped offset some losses on cattle.

Dairies faired reasonably well, as lowered prices were offset by lower input costs and most should profit.

Yearly Average 

2012

2013

2014

2015

2016

2017

 2018

2019 (est)

Wheat

$6.94

$7.10

$6.80

$4.90

$3.63

$3.68

 $4.73

$4.60 

Fed Cattle

$122.75

$125.67

$130.00

$148.00

$121.05

$121.50

 $116.11

 $120.00

Corn

$7.03

$6.41

$4.9

$4.04

$3.59

$3.67

 $3.89

$ 3.60

Cotton

$85.40

$79.41

$78.00

$60.96

$60.33

$67.80

 $69.65

 $72.00

Milk

$17.49

$18.42

$19.00

$15.75

$14.96

$15.94

 $15.94

 $15.00

Energy

Oil had a great run up in 2018, but gave most of it back in December going from $70 back to $45.

Natural Gas prices were mostly $2.80, until a spike in November and December took them over $4 (some of this was caused by higher prices for liquids pulling up gas prices).  Oil fell due to over production and the world situation. The price drop pulled down liquids and natural gas with it. 2019 forecasts are for oil to get back into the $50 to $60 range, but natural gas will drop below $3 due to the high volumes of production in the U.S. Drilling is 30% more efficient, area rigs should stay around 20 for 2019.

Yearly Average

2012

2013

2014

2015

2016

2017

2018

 2019 (est)

Active Rigs

69

71

72

26

9

15

22

21 

Posted Oil (Avg)

$84.45

$94.48

$93

$46.04

$38.95

$47.50

 $64.43

 $58.00

Natural Gas (Avg)

$2.48

$3.63

$4.10

$2.74

$2.49

$3.130

 $2.94

$2.95

Travel

2018 saw good improvement in Airline Boardings (up 5.26%) and the Motel tax (up 5.31%).  New construction has brought on more motel rooms and higher prices, which help the tax revenue. 2019 should show a motel tax increase of about 4% (helped by new Ballpark), with Airline Boardings flattening to about a 2% growth. 

Year

2012

2013

2014

2015

2016

2017

2018

2019 (est) 

Airline Boardings

398,968

380,077

372,205

343,996

337,237

342,709

360,762

371,224 

-2.96%

-4.73%

-2.07%

-7.50%

-1.96%

+1.62%

+5.26% 

 +2.90%

Year

2012

2013

2014

2015

2016

2017

2018

2019 

Motel Tax

 

5,002,181

5,862,651

6,156,822

6,407,488

6,817,762

6,611,065

6,962,730

7,276,052 

+3.79%

+17.20%

+5.02%

-5.00%

+6.40%

-3.03%

+5.31% 

+4.50% 

Bankruptcies were up slightly, even though the job market has been strong. They are trending in a range for the last seven years.

Bankruptcy Filings

2012

2013

2014

2015

2016

2017

2018

 2019 (est)

Annual Average

625

439

430

327

374

426

439

450 

Amarillo Leading Indicators

2012

2013

2014

2015

2016

2017

2018 

2019 (est)

Annual Average

+1.60

+1.80

-0.60

-7.40%

+1.50%.

-1.40%

 -5.60%

We don't forecast this. We let the numbers do that for us 

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.

 

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