Tough times in Texas: state leaders still wait for recovery to arrive
After years of basking in the warmth of Sunbelt prosperity, Texas is feeling the cold winds of recession. The Texas economic downturn is sharp. Statewide unemployment jumped to 8.5 percent in January from 4.6 percent a year ago. Unemployment in some areas along the Mexican border now tops 20 percent.Skip to next paragraph
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Last week, Texas Gov. Mark White (D) promised to target additional state and federal aid on the depressed region to help offset the spillover effects of Mexico's peso devaluations. This week, Mr. White is in Washington lobbying for this extra aid.
Houston, heavily dependent on the oil industry, saw its jobless rate climb to 9.1 percent, no longer far below the national 10.4 percent level. The city's downturn even threatened its triple-A bond rating, the highest attainable. But after some financial footwork to transform a potential $30 million budget deficit into a $16 million surplus, Houston retained the top rating for $100 million in bonds it offered this week.
The Texas economy has diversified rapidly by building its manufacturing, construction, high technology, and banking sectors. Yet the driving force behind economic activity here remains the oil and gas business. Whether a developer is searching for tenants to fill a new office complex, shopping center, or apartment tower, he pays attention to the oil industry outlook. This outlook is summed up by the First City Bancorporation: ''Predictions of oil field activity in 1983 generally vary between a decline of about 15 percent to an increase of 5 percent.'' Current uncertainty over world oil prices adds to lingering concerns here that the economic recovery may not arrive until 1984.
Whether US oil prices hover around their present $30-a-barrel level or plunge rests both on what Arab oil ministers hammer out within the OPEC cartel and on US government policies. So an overflow crowd of corporate executives turned up for a Rice University/Coopers & Lybrand seminar in Houston to learn about administration plans from President Reagan's chief economic adviser Martin Feldstein and about Democratic alternatives from House majority leader Jim Wright (D) of Texas.
Mr. Wright held out the brightest prospect of a strong recovery. Altering Mr. Reagan's economic course by holding defense spending increases to 5 percent real growth, eliminating tax changes, and other measures, he estimates, could produce a $13 billion surplus in 1986, rising to $90 billion in 1988.
Dr. Feldstein made it clear that the White House is committed to reducing federal deficits. But he warned that ''there is still room to doubt whether a sustained recovery has begun.'' He said that if federal funds for nondefense programs could be cut from the current 16 percent of gross national product to 1960's 8 percent level, ''we would have a budget surplus now and could provide substantial additional tax reductions.'' But he added that there was no likelihood of achieving such a change.
Wright presented a different formula for recovery: increased spending for reindustrializaton, job training programs, and education. He said such spending ''is not an expense, it is an investment.''