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.