Welcome, Guest
Please let us know how we can help.

Economic Forecast

2014 Recap

  • 2014 was the 1st slowdown in Amarillo’s economy in 5 years
  • Slower job growth led to flattening retail sales
  • Good moisture alleviated lower ag commodity prices

Areas of Economic Strength

  • Good rains
  • Feedyards and Dairies were profitable
  • Construction was strong with 20% of roof permits coming from 2013 hailstorm

Areas of Economic Weakness

  • Less people working than in 2013
  • Sharp drop in Oil and Natural Gas in the 4th quarter
  • Government regulations cut availability of home loans for many

2015 Forecast

  • Continuation of slowdown in jobs will hurt the economy in 2015
  • Retail sales will be helped by lower gasoline prices
  • Energy sector will have a very rough year with drilling cut by 1/3
  • Cattle will stay strong as low numbers keep prices up

OUTLOOK FOR SPECIFIC SECTORS

Real Estate

Housing starts should stay in the 450 range, but permits will be down because of the drop in roofing. Commercial construction has been good and will hold up the total numbers. We do not expect much growth. Prices for existing properties and land should be flat, but some of the rural real estate may soften. There were 685 foreclosures in 2014 compared to 842 in 2013.

Building Permits20082009201020112012201320142015 (est)
Housing Starts 469 549 507 553 527 484 454 450
Remodels 1,515 1,668 2,082 1,945 2,037 1,536 1,752 1,000
Roof Permits 816 1,015 1,305 1,044 1,141 17,055 6,304 2,000
Comm. Units 346 355 465 508 521 371 512 500
Total Value (mil) $409 $384 $384 $276 $346 $480 $589 $350

Retail Sales

Retail sales have slowed in the 4th quarter, and the lack of job growth will have a negative effect going into 2015. However, lower prices for gasoline will put additional spending power in consumers’ pockets. We expect used car sales to continue strong and other retail sales to get a boost from higher disposable income. Later in the year retail sales could turn up if oil prices rebound.

Sales Tax Collections
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 8.7%
2012 $65,385,227 up 5.8%
2013  $70,744,051 up 8.2%
2014 $71,801,582 up  1.5%
2015 (est) $72,000,000 up .3%

Consumer Price Index (Amarillo)

Inflation is a non-event with Amarillo being below 1% in 2014. We expect this index to continue in the less than 2% range due to falling gasoline prices. The prices have flattened, and utility bills have come down so healthcare will be the only upward pressure as more money is spent in this area. We expect inflation to stay tame in 2015.

C.P.I. Increases:AmarilloNational
2008 6.6% 4.2%
2009 .30% -.4%
2010 .40% 1.6%
2011 3.10% 3.2%
2012 1.50% 1.7%
2013 1.48% 1.7%
2014 2.50% 2.2%
2015 (est) 1.30% 2.6%

Employment

The large national employers quit growing and had small decreases in workers employed. No other businesses picked up the slack in 2015. We do not perceive a bubble in this area, so the declines in oil fields services will be the only direct negative. However, overall firms will be cautious in hiring leading to continued slow job growth. Certain sectors will ease up. (Truck drivers will return as the boom in the East Panhandle slows.) Unemployment should stay under 5%.

(12 Month Average)Household SurveyEmployers SurveyAverage Unemployment
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 130,800   117,000   4.5%
2015 (est)   129,000   116,500   4.9%

 

Agri-Business

Good moisture in 2014 helped enormously. Unfortunately commodity prices fell, especially corn, and total income levels were about flat. Cattle had a wonderful year, and the pain caused by the herd reductions two years ago keeps the foundation under prices at this point in the cattle cycle. Dairy prices for milk are coming down slightly but still are at profitable levels as input costs (especially corn) remain manageable for dairies and feed yards. The prices have turn up as Russia has stopped exporting. Much of the winter wheat may be grazed out. Cotton has disappointed this year, and the outlook remains weak.

Yearly Average200820092010201120122013 20142015 (est)
Wheat   $7.56   $4.82   $4.94 $7.23 $6.94  $7.10 $6.80 $5.85
Fed Cattle   $92.92   $84.00   $96.20 $114.23 $122.75   $125.67 $130.00 $155.00
Corn   $5.23   $3.99    $4.08   $6.77        $7.03   $6.41        $4.9   $4.30
Cotton   $58.84   $67.89   $79.75      $135.84      $85.40   $79.41      $78.00   $60.04
Milk   $17.56        $13.04        $15.40     $19.19    $17.49     $18.42        $19.00   $17.28

Energy

The good times in the energy patch came to a screeching halt in the 4th quarter as oil prices fell off the cliff and dropped 50%. Then the warmer winter (so far) caused natural gas prices to fall by 30%. These steep drops will cut into new drilling, and we expect the active rigs to fall by 40% 12 months from now. A more subtle negative will come from the smaller royalty checks that have given a boost to all parts of the Texas Panhandle. Natural gas and liquids prices join oil in the downward spiral. Royalty checks may decline by 40%-50%. These prices have always been cyclical, but no one is comfortable forecasting how long we will stay at these low levels. Energy will have a negative impact, at least in the first half of 2015.

Yearly Average200820092010201120122013 20142015 (est)
Active Rigs 85 46 62 75 69 71 72 44
Posted Oil (Avg) $95.28 $66.81 $75.19 $91.92 $84.45 $94.48 $93 $59.89
Natural Gas (Avg) $9.09 $4.82 $4.37 $4.04 $2.48 $3.63 $4.10 $3.04

Travel

Travel numbers slowed as airline boarding’s were hurt by higher prices and reduced service. Motel tax flattened out as overall demand was flat even though new motels are opening up, and rates remain firm. We expect this sector to flatten out for 2015 at levels seen in 4th quarter 2014.

Airline Boardings200820092010201120122013 20142015 (est)
   453,291  406,630  408,053  411,154  398,968  380,077  372,205 365,000
  -1.00% -10.29% +.35% +.76% -2.96% -4.73% -2.07% -1.94%
Motel Tax200820092010201120122013 20142015 (est)
  4,345,307   4,477,531   4,488,774   4,819,508   5,002,181   5,862,651   6,156,822   6,100,000
  +.05%  +3.04%  + .25% +7.37% +3.79% +17.20% +5.02% -.92%

Bankruptcy continues to decline as the economy has been manageable, and personal bankruptcies have recovered from their higher levels 4 years ago. We think an overall slowdown in the area’s economy will increase the number of filings in 2015.

Bankruptcy Filings20082009201020112012201320142015 (est)
Annual Average 688 880 865 723 625 439 430 500

These numbers have been soft for the last 6 months and continue to look soft, adding to the caution seen in all of our economic forecasts.

Amarillo Leading Indicators20082009201020112012201320142015 (est)
Annual Average -3.50 .30 3.40 .20 1.60 1.75 -.60 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.

Personalization Settings

x

Welcome

Amarillo National Bank would like to personalize your banking experience. Please enter your first name below.

This level of personalization will not lead to the sale of your name or leak your identity. The information you provide will only be stored on your computer and will not be transferred to the web server.

Please do not remind again