amarillo economic forecast for 2010
2009 Recap
Amarillo's recession deepened due to job losses, lower commodity prices, and reduced consumer confidence. Construction held up as several large commercial projects started and low mortgage rates propped up housing. Inflation vanished, and savings increased. Autos, housing, and credit cards lost the bottom 10% of their sales as subprime customers vanished.
Areas of Economic Strength
Commercial construction remained robust and residential improved in the last half
Job losses stopped in the autumn
Good moisture helped farm income
Input costs made dairy and ethanol profitable in the last quarter
Areas of Economic Weakness
2,000 less people working plus more with shorter hours
Retail sales off 5-12% each of last 6 months
Cattle and autos had poor years
Oil and gas income down by 2/3
2010 Forecast
A fairly flat year at these lower levels.
Employment should pick up slightly.
Retail sales will stay slow but comparisons will be easier in the second half.
Construction should drop off as commercial slows and mortgage rates rise.
Outlook for specific sectors
Real Estate
Housing prices were off 5% in '09 and may drop another 5-10% in 2010 due to tighter credit requirements and foreclosure sales of subprime. Luckily only 1,300 homes are on the market vs. 1,500 last year and 3,300 in 1988. Commercial construction should wind down to a lower level. Commercial values are holding better than other cities due to no oversupply.
| Building Permits | 2005 | 2006 | 2007 | 2008 | 2009 | 2010(est) |
|---|---|---|---|---|---|---|
| Housing Starts | 829 | 677 | 663 | 505 | 596 | 470 |
| Remodels | 3,432 | 1,901 | 1,857 | 1,515 | 3,265 | 2,000 |
| Roof Permits | 2,536 | 970 | 996 | 816 | 1,020 | 900 |
| Comm. Units | 726 | 594 | 474 | 346 | 502 | 400 |
| Total Value (mil) | $455 | $387 | $409 | $386 | $442 | $320 |
Retail Sales
Lower employment, minimal wage growth, and higher savings combined to pull down retail sales, especially the 2nd half of ’09. 2010 should see flattening at a level down 10% the first half and down 6% the second half. Vehicle sales should come off their ’09 low level by about 6%.
| Sales Tax Collections | ||
|---|---|---|
| 2005 | $50,524,792 | up 4.9% |
| 2006 | $53,770,280 | up 6.4% |
| 2007 | $56,076,026 | up 4.3% |
| 2008 | $59,442,045 | up 6.0% |
| 2009 | $56,514,271 | down 4.9% |
| 2010 (est) | $51,993,129 | down 8.0% |
Consumer Price Index (Amarillo)
2009 saw no inflation overall; however, 2010 will have higher gasoline and predicted higher grocery prices that will be offset by cheaper housing and utilities.
| C.P.I. Increases: | Amarillo | National |
|---|---|---|
| 2005 | 3.8% | 3.4% |
| 2006 | 4.6% | 3.2% |
| 2007 | 4.0% | 2.8% |
| 2008 | 6.6% | 4.2% |
| 2009 | 0.3% | 0.4% |
| 2010 (est) | 2.0% | 2.1% |
Employment
2009 saw drops in employment of 1,000 to 2,500 each month. That trend declined in the 4th quarter. Several national firms are now hiring back but construction declines may offset those gains. Most firms have slimmed down and we expect the 2nd half to be flat.
| (Average) | Household Survey | Employers Survey | Average Unemployment |
|---|---|---|---|
| 2005 | 122,675 | 109,900 | 3.7% |
| 2006 | 127,717 | 112,500 | 3.8% |
| 2007 | 126,583 | 112,500 | 3.3% |
| 2008 | 129,525 | 113,025 | 3.5% |
| 2009 | 124,333 | 111,882 | 4.9% |
| 2010 (est) | 124,700 | 111,000 | 4.6% |
Agri-Business
Timely moisture helped farmers offset lower prices. Cattle had a terrible year due to the glut of other meats. Cotton prices shot up in the fall while dairy, feed yards, and ethanol benefited from lower corn costs. Irrigated farmland prices actually increased but recreation ranch prices stagnated. Farm income may be flat due to steady prices while cattle should be beginning an up cycle.
| Yearly Average | 2006 | 2007 | 2008 | Average | Peak | Year-End 2009 | 2010 (est) |
|---|---|---|---|---|---|---|---|
| Wheat | $4.44 | $5.94 | $7.56 | $4.83 | $5.70 | $4.82 | $5.10 |
| Fed Cattle | $86.00 | $93.08 | $92.92 | $83.00 | $86.00 | $84.00 | $86.00 |
| Corn | $2.80 | $3.94 | $5.23 | $3.65 | $4.22 | $3.99 | $4.25 |
| Cotton | $47.78 | $47.96 | $58.84 | $51.90 | $67.28 | $67.89 | $62.00 |
Energy
Oil & gas income in the Panhandle plummeted by almost 70% but prices are stabilizing at low levels for gas (2/3 of our income) and good prices for oil. Gas producers finally saw prices closer to national averages after several years of price differentials. Shale production should keep natural gas in the $5 range and drilling activity low in the Panhandle.
| Yearly Average | 2006 | 2007 | 2008 | Average | Peak | Year-End 2009 | 2010 (est) |
|---|---|---|---|---|---|---|---|
| Active Rigs | 73 | 66 | 85 | 34 | 58 | 40 | 40 |
| Posted Oil (Avg) | $62.61 | $67.87 | $95.28 | $56.55 | $70.87 | $74.07 | $72.00 |
| Natural Gas (Avg) | $6.82 | $7.03 | $9.09 | $3.98 | $5.74 | $4.32 | $5.20 |
Travel
A recession drop-off in travel pulled down boardings and slowed motel tax growth. Fewer seats available will keep boardings low.
| Airline Boardings | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 (est) |
|---|---|---|---|---|---|---|
| 444,886 | 445,068 | 457,960 | 450,954 | 402,702 | 395,000 | |
| +7.2% | +0.0% | +2.9% | -1.6% | -10.7% | -2.0% |
| Motel Tax | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 (est) |
|---|---|---|---|---|---|---|
| 3,586,670 | 3,937,584 | 4,342,995 | 4,345,307 | 4,477,531 | 4,400,000 | |
| +4.6% | +9.8% | +10.3% | +0.05% | +3.0% | -1.3% |
| Bankruptcy Filings | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 (est) |
|---|---|---|---|---|---|---|
| Annual Average | 2,006 | 552 | 594 | 688 | 880 | 1,000 |
| Amarillo Leading Indicators | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 (est) |
|---|---|---|---|---|---|---|
| Annual Average | 4.5 | -3.1 | 1.4 | -3.5 | 0.3 | 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.
