Amarillo Economic Forecast

See PDF Version

Amarillo Economic Forecast for 2023

2022 Recap

2022 had it all: Growth, then inflation, then flattening; booming energy, drought, then second half slowdown, plus labor and supply shortages. Job growth slowed and retail sales growth dropped from 13% to 4%. Construction was steady.

Areas of Economic Strength

• Amarillo grew about 11% in the first half, 4% in the last.
• Housing starts, retail sales, energy prices, motel occupancy, commodity prices all peaked in the summer, then dropped off 10-30%.
• Construction and airline boardings stayed up.
• Cattle and dairy were helped by higher prices.

Areas of Economic Weakness

• Inflation affected everyone.
• Drought
• Continued tight labor and supply chain shortages.
• Higher interest rates began to hurt housing and auto sales.

2023 Forecast

Loosening labor and supply chains will boost businesses. Price increases will mask slowing retail sales. Government entities are still flush with stimulus money. If drought continues, agri-business will continue to suffer. Energy should stay strong, boosting our entire area. Inflation, tight money, and higher labor costs will combine to hurt businesses and consumers by the latter half of 2023.

---

Outlook for Specific Sectors

Employment

Tight job market and Amazon’s opening pushed up wages. Many businesses had staff shortages. Major employers stayed flat, but AIG dropped 500 workers. Construction has held steady and should continue in 2023. Major employers (Pantex, Bell, Tyson, Government, and energy related) should maintain current staffing levels.

Retail Sales

Stimulus money boosted sales in the first half, then inflation took its toll. Slower job growth in Amarillo will be partially offset by higher wages in 2023. Inflation will mask declines in units sold. Higher energy income may ameliorate lower stock market returns and less ag income from our area.

Consumer Price Index

Amarillo inflation was difficult to measure, as some prices jumped due to short- ages, then flattened or dropped. Commodities were up 50%, then down to lev- els about 20% higher than one year ago. Groceries were up 13% (with a range of 5% to 100% for some items). 2023 inflation may slow to 6%; however that is still triple the level of the last decade (and represents a tax on everyone).

Real Estate

House sales were booming the first quarter and slowed marketably by Fall. Early 2022 material and labor shortages eased and sales prices were up 8%. Mean- while, pent-up demand left housing starts above the levels of the past decade. Commercial construction remains good, but total permits may be in the lower range of the past decade. (2022’s drop was no Amazon like 2021) Over 750 septic permits in Potter and Randall County pushed our total housing starts to about 1,600 new homes.

Agri-Business

Drought cut yields just as prices rose throughout the first half. A poor wheat crop and higher irrigation costs hurt income. Much of our cotton was disas- tered for insurance. Midsummer rains helped Fall crops. Cattle prices rose, but cow and calf operators had to thin herds due to the drought and missed much of the upside. Dairy had a better year than expected. Lack of moisture will hurt farm incomes. Feedyards are moderately profitable, and dairy should have another good year overcoming high input costs. Farm land prices continue to move higher.

Energy

Oil and gas prices peaked in the summer, and then fell back to last winter’s levels. Drilling activity more than doubled. 2023 forecasts rising oil prices, while natural gas fluctuates between $4 and $7. All this combines to support our economy, but higher prices will spur inflation.

Travel

Tourism continued to prop up our economy, as motel occupancy stayed high and airline boardings surged. Motels slipped some in the last half, but higher room rates kept the motel tax increasing. 2023 should continue holding onto the increases of this year, even though motel occupancy percentages are under pressure. More airline nonstops will boost boardings.

Backruptcy Filings

Stimulus money buffeted consumers for the last two years. Inflation pressures will fall on consumers, leading to increases in this category.

Amarillo Leading Indicators

Our index turned negative in the Fall predicting a weaker economy six months into the new year.