Tuesday AM March 24th, 2009

The recession in the sunbelt is likely to be less severe than in the rest of the country. That’s according to the quarterly compass bank U.S. regional watch. Ed Mayberry reports.


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Economic indicators suggest the recession has deepened, with more joblessness and a decreased gross domestic product.  But the latest report from economists at BBVA Compass says Texas will outperform other states and recover faster, according to Compass economist Nathaniel Karp.

“Arizona, Florida and Alabama are the ones facing the biggest pressures.  Not surprising, Texas comes out very good because of the $2 billion surplus and the Rainy Day Fund.  I don’t think it’s the make-or-break issue for Texas, but obviously, by the time that the fiscal stimulus package comes into play, at least Texas can withhold this period better than some other states.”

There are short-term pressures, such as lending standards, commercial real estate pressures and other factors that we hear about daily.  To gauge the long-term Texas economy, Karp adds mid- and long-term fundamentals, such as productivity growth, demographics and economic diversification.

“Texas is highly diversified.  We have the high-tech sector, the energy sector, which people tend to associate to the oil sector, but actually it’s one of the best states positioned for the renewable energy sector.  The health care and financial sector is very solid, so when you add all those issues together, you get this mid-term, long-term perspective, and those are extremely solid for some of these states, particularly Texas.”

But the Compass report expects a deeper economic slowdown in the sunbelt region this year.  A stronger dollar and lower worldwide economic activity will limit expansion of regional exports. 

Ed Mayberry, KUHF Houston Public Radio News.

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