2021 Economic Forecast

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2020 Recap

  • The strong start of the year gave way to halt and despair.
  • Amarillo rebounded faster than other cities, as employment and retail sales moved up, led by stimulus and housing.
  • Confidence shattered from Government shutdowns.

Areas of Economic Strength

  • Housing boomed due to low rates
  • Employment regained two-thirds of its loss
  • Retail sales climbed back to positive by year-end
  • Weaker dollar and foreign demand boosts commodity prices

Areas of Economic Weakness

  • Job losses reached 20,000 before moving back to 8% true unemployment
  • Energy collapse
  • Tourism stopped, but auto travel rebounded in 2nd half
  • Uncertainty regarding shutdowns

2021 Forecast

  • Housing and retail sales will provide a boost for the first quarter.
  • Commercial construction may give an added bump.
  • Retail sales and auto sales should stay positive.
  • Job growth in the 2nd half will support retail sales and housing.
  • Pent up demand will help all sectors.
  • Vaccine and end of lock downs will boost confidence.

Outlook for Specific Sectors

Real Estate

Low rates jump started housing beginning in the summer and pushed prices up over 10%. The boom should continue; and commercial will have a fine year.

Building Permits

2014

2015

2016

2017

2018

2019

2020

2021 (est)

Housing Starts

454

406

512

477

505

 403

479

550

Remodels

1,752

1,506

1,213

1,131

 1,040

 879

673

700

Roof Permits

6,304

2,260

1,778

3,910

 2,136

4,178

3,839

2,000

Comm. Units

512

378

380

506

415

418

 267

325

Total Value (mil)

$589

$485

$460

$686

 $472

$332

 $494

$650

Retail Sales

Stimulus and higher savings combined with low rates on homes and autos will juice spending, especially compared to the terrible 2nd quarter of 2020. 2nd half will be buoyed by more people working.

Year

2014

2015

2016

2017

2018

2019 

2020 

2021 (est)

Sales Tax Collection

 

$71,801,582

$74,423,000

$74,412,780

$74,177,530

 $77,261,171

$78,934,689

 $81,094,099

$85,959,744

+1.5%

+2.9%

-0.00013%

-0.003%

+4.16% 

+2.17% 

 2.74%

6.00%

Consumer Price Index (Amarillo)

  • CPI was down in 2020 due to lower gasoline
  • 2021 should see higher commodity prices drive up groceries and other goods
  • Health care and miscellaneous will be up
  • So CPI should increase 3% in Amarillo, while the National number is 2%

CPI Increases 

2014

2015

2016

2017

2018

2019

2020

2021 (est)

Amarillo

2.50% 0.58% 1.03% 0.97% 2.90% 2.00% -1.23% 3.20%

National

2.20%

0.50%

1.70%

2.20%

2.20%

2.10%

0.20%

2.10%

Employment

  • 20,000 jobs were lost, but two-thirds came back
  • 6,000 workers left the Labor Force, so unemployment looked low (see Actual Unemployment)
  • We see gradual increases in most industries, with hospitality improving in the second half
  • The energy slump should heal slowly

12 Month Average 

2014

2015

2016

2017

2018

 2019

2020

2021 (est)

Household Survey

130,800

125,741

126,825

129,300

129,667

129,939

122,155

125,000

Employers Survey

116,283

116,975

119,708

123,200

121,950

121,184

161,353

121,000

Average Unemployment

4.5%

4.0%

3.1%

2.2%

 2.7%

2.5%

4.8%

5.5%

Agri-Business

Government checks offset lower yields due to drought, as commodity prices increased. Dairy and feedlots had profitable years. 2021 should be boosted by foreign trade, but yields may stay low due to La Nina. Input costs will squeeze margins for both dairy and feedlots, but both should remain profitable.

Yearly Average 

2014

2015

2016

2017

 2018

2019

2020 

2021 (est)

Wheat

$6.80

$4.90

$3.63

$3.68

 $4.73

$4.30

 $4.71

$5.20

Fed Cattle

$130.00

$148.00

$121.05

$121.50

 $116.11

 $115.71

 $109.10

118.00

Corn

$4.90

$4.04

$3.59

$3.67

 $3.89

$4.07

 $3.85

4.10

Cotton

$78.00

$60.96

$60.33

$67.80

 $69.65

 $66.76

 $58.56

68.00

Milk

$19.00

$15.75

$14.96

$15.94

 $14.28

 $16.25

$17.57 

18.00

Energy

2019 saw production and income decline in the Panhandle. Lower gas prices ($2.33) due to a giant glut in supply in the Permian forced drillers to nearly stop activity. There were 20 rigs running at the start of 2019. Today there are 6. In the Permian, Producers were paying to have their gas shipped out due to lack of pipelines. Natural gas prices should stay around $2 and Oil should be around $60.

Yearly Average

2014

2015

2016

2017

2018

 2019

2020

2021 (est)

Active Rigs

72

26

9

15

22

10

2

1

Posted Oil (Avg)

$93.00

$46.04

$38.95

$47.50

 $64.43

 $58.17

 $39.63

$45.00

Natural Gas (Avg)

$4.10

$2.74

$2.49

$3.13

 $2.94

$2.68

 2.13

2.50

Travel

Airline Boardings plummeted starting in mid-March, as did Motel occupancies. Travel by car recovered by the summer and November and December were ahead of last year. We expect airline boardings to stay weak, but motel tax should be up, especially compared to 2nd Quarter 2020.

Year

2014

2015

2016

2017

2018

2019

2020 

2021 (est)

Airline Boardings

372,205

343,996

337,237

342,709

360,762

366,640

232,585

250,000

-2.07%

-7.50%

-1.96%

+1.62%

+5.26% 

 +1.63%

 -36.56%

+7.48%

Year

2014

2015

2016

2017

2018

2019

2020

2021 (est)

Motel Tax

 

6,156,822

6,407,488

6,817,762

6,611,065

6,962,730

7,193,818

5,467,228

7,200,000

+5.02%

-5.00%

+6.40%

-3.03%

+5.31% 

+3.32%

-24.00%

+31.69%

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

2014

2015

2016

2017

2018

 2019

2020

2021 (est)

Annual Average

430

327

374

426

439

417

328

500

Amarillo Leading Indicators

2014

2015

2016

2017

2018 

2019

2020

2021 (est) 

Annual Average

-0.60

-7.40%

+1.50%.

-1.40%

 -5.60%

-11.67%

1.50%

 We do not 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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