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Economic Forecast

2013 Recap

The mid-year boost of rain and hail helped pull up Amarillo’s economy, as job growth slowed and construction flattened.  Retail sales were the bright spot all year.

Areas of Economic Strength

  • Hail and rains poured down mid-year benefits
  • Retail sales up 8%
  • Cattle turned positive in the 4th Quarter
  • Oil and gas remained strong
  • Vehicle sales were the highest in 5 years
  • Farm incomes were up, even with lower prices
  • Higher stock market

Areas of Economic Weakness

  • Higher mortgage rates slowed housing starts
  • Job growth was half the peak levels of 2 years ago
  • Cattle losses and a decline in numbers saddled the industry with a tough first 9 months 

2014 Forecast

We expect softness in the first quarter as employment and construction stay flat. Oil, cattle and farming should provide a boost while low inflation and some wage growth will pick the local economy up by summer.

OUTLOOK FOR SPECIFIC SECTORS

Real Estate

Roof permits totaled $213,000 in 2013 (44% of the total).  Higher mortgage rates have slowed housing starts and the mid-year hail insurance boom has played out. With slower job growth, Housing Starts will be less than the last 5 years but commercial building should remain steady. Property values should inch up 2%-4%. New Federal laws will make it even tougher to qualify for a mortgage loan. Apartment occupancy should continue to do well.

Building Permits20072008200920102011201220132014 (est)
Housing Starts 605 469 549 507 553 527 484 450
Remodels 1,1849 1,515 1,668 2,082 1,945 2,037 1,536 1600
Roof Permits 967 816 1,015 1,305 1,044 1,141 17,055 2000
Comm. Units 473 346 355 465 508 521 371 500
Total Value (mil) $408 $409 $384 $384 $276 $346 $480 $350

Retail Sales

Retail Sales have boomed during 2013 compared to the lower levels of 2012. Huge gains in the stock market really helped in 2013. 2014 comparisons will be tougher so we expect increases of 5%-6%, since job growth is slower, interest rates are higher and health costs are rising.

Sales Tax Collections
2007 $56,076,026 up  4.3%
2008 $59,442,045 up 6.0%
2009 $56,514,271 down 4.9%
2010 $56,863,740  up .1%
2011 $61,805,523 up 8.6%
2012 $65,385,227 up 5.8%
2013  $70,744,051 up 8.0%
2014 (est) $73,500,000 up 5.0%

Consumer Price Index (Amarillo)

Lower energy costs held down inflation in 2013, helped by stable grocery and consumer prices plus cheaper gasoline. Higher gasoline, health care and energy costs along with higher interest rates will edge the CPI to the 2.5% to 3% range locally. Utility bills will be up in the 1st quarter since temperatures were 10 degrees cooler than last December in Amarillo.

C.P.I. Increases:AmarilloNational
2007 4.0% 2.8%
2008 6.6% 4.2%
2009 .3% -.4%
2010 .4% 1.6%
2011 3.1% 3.2%
2012 1.5% 1.7%
2013 1.48% 1.7%
2014 (est) 2.5% 2.2%

Employment

2013 saw our major employers holding jobs flat, which was a plus in the face of government reductions elsewhere. Area commodities will boost the Panhandle jobs, and service, hospitality, and health care should help Amarillo add 1,500 jobs (below our 5 year average of 2,200).

(12 Month Average)Household SurveyEmployers SurveyAverage Unemployment
2007 126,583   112,500   3.3%
2008   129,525   113,025   3.5%
2009   124,333   111,882   4.9% 
2010   125,817   110,667   5.6%
2011 126,833    112,200   5.7%
2012   128,125   114,490   4.1%
2013   129,385   115,750   4.7%
2014 (est)   130,800   117,000   4.5%

Each March, the state recalculates the employment numbers so past comparisons are difficult.

Agri-Business

Rain sure made a difference in 2013, as farm yields improved and the cattle liquidation stopped. Dairies were profitable all year and feedlots started making money in the 4th quarter after 18 months of big losses. Lower corn prices helped lower input costs in cattle and dairy operations. Higher yields drove farming income up 5%. 2014 should continue these trends, if it rains. Cotton acreage is forecast by Texas A&M to increase 20% while corn acreage should drop 10%. Overall, income gains will boost the Panhandle.

Yearly Average2007200820092010201120122013 2014 (est)
Wheat $5.94   $7.56   $4.82   $4.94 $7.23 $6.94  $7.10 $6.80
Fed Cattle $93.08   $92.92   $84.00   $96.20 $114.23 $122.75   $125.67 $130
Corn   $3.94   $5.23   $3.99    $4.08   $6.77        $7.03   $6.41        $4.9
Cotton   $47.96   $58.84   $67.89   $79.75      $135.84      $85.40   $79.41      $78
Milk   $18.78   $17.56        $13.04        $15.40     $19.19    $17.49     $18.42        $19

Energy

Oil prices were steady in 2013 and natural gas climbed in the fall.  We expect drilling activity to continue in the eastern Panhandle as oil well drilling costs decline.  Older wells will still be reworked throughout our area.  Gas prices above $4 will help operators and royalty owners.

Yearly Average2007200820092010201120122013 2014 (est)
Active Rigs 66 85 46 62 75 69 71 72
Posted Oil (Avg) $67.87 $95.28 $66.81 $75.19 $91.92 $84.45 $94.48 $93
Natural Gas (Avg) $7.03 $9.09 $4.82 $4.37 $4.04 $2.48 $3.63 $4.10

Travel

Airline boardings dropped 4% as airlines raised fares and Southwest cut Dallas flights from 8 to 5 daily. Motel tax was strong in 2013 due to more rooms available and higher rates. Southwest will go to 6 flights in 2014 and if we can survive the October Wright Amendment demise, we should level out on boardings and be up again on the motel bed tax.

Airline Boardings2007200820092010201120122013 2014 (est)
  413,150   416,134   371,235   372,547   376,502   398,968   380,077   370,000
  +3% -.72% -10.8% +.4% +1.1% -2.0% -4.7% -2.6%
Motel Tax2007200820092010201120122013 2014 (est)
  4,342,995 4,345,307   4,477,531   4,488,774   4,819,508   5,002,181   5,862,651   6,174,000
  +10.3%  +.05% +3.0%  + .3% +6.7% +3.8% +17.2% +6.0%
Bankruptcy Filings20072008200920102011201220132014 (est)
Annual Average 594 688 880 865 723 625 439 430

A positive trend as economy improves

Amarillo Leading Indicators20072008200920102011201220132014 (est)
Annual Average 1.4 -3.5 .3 3.4 .2 1.6 1.75 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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