Economic Analysis

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August 2022

Amarillo’s economy gained strength over the summer, with more people working, higher wages and higher commodity prices.

Amarillo has 3,400 more people working than 12 months ago, according to the Employer’s Survey. The Household Survey shows we have 2,400 more people working than a year ago. Wages are up 18% from last Summer, which is finally over the rate of inflation, but not by much.

Retail Sales are only up 6% compared to 12 months ago (and 10% YTD). New Car sales are down 22% from last August and Used Car Sales are down 14%.

Travel remains strong with higher Airline Boardings +10% (as Southwest adds flights) and Motel Tax is up 13% (increase is in higher room rates, while occupancy is down slightly, as high gasoline prices slow some travel).

Building Permits for last month were down 10% compared to a year ago. Year to Date Permits are down 48% compared to last year’s permits, which were bolstered by the Amazon Warehouse. Last month’s Residential starts are down 19% from 12 months ago. Year to Date starts are up 16% from a year ago. 30-year mortgage rates are over 6%. The Amazon Warehouse is up and running, with bays full of trucks. They have job positioned openings and are quoting new hires $16.10 an hour.

There are 9 drilling rigs in the Panhandle-the same number as a year ago. Natural gas prices are hovering around $8 and Oil is $90, both up sharply from last year, but below the late Spring peaks.

Grain prices are up. Wheat is up 23%. Cotton is up 31% , although we are anticipating a bad area crop. Corn is up 8% to $6.11, and we are hearing about area basis between $0.70-$2.00 (or higher price for delivery in this area).

Cattle prices are up 14% to $138, but Feedyards are losing $167 a head. Record Cost of Gain inflation is eliminating any margin. Same story with the milk cows- high milk prices, but higher input costs are hurting area dairies. Milk prices are at $20.25. We remember when all it took was $16 milk to make dairy farms profitable.

 August 2022

Current Month

Last Month

Last Year

 Sales Tax Collections

$9,627,079

$7,954,084

$9,098,784

 Sales Tax Collection-YTD

$66,590,280

$56,963,201

$60,482,406

 New Vehicle Sales

612

488

783

 Used Vehicle Sales

1,636

1,279

1,905

 Airline Boardings

36,425

34,576

32,941

 Hotel/Motel Receipt Tax

$1,079,136

$777,870

$952,879

 Population - Corporate Amarillo

199,747

199,747

191,514

 Employment - CLF

134,335

134,004

132,847

 Unemployment Rate

3.10%

3.20%

4.00%

 Total Workers Employed (Household Survey)

130,177

129,719

127,595

 Total Workers Employed (Employers Survey) 

124,200

124,572

121,591

 Average Weekly Wages

$936.50

$936.50

$1,013.50

 Gas

69,603

68,738 69,506

Interest Rates: 30 Year Mortgage Rates

6.125%

6.125%

3.375%

 Building Permits Dollar Amount

$20,670,003

$30,262,703

$23,000,291

 Year to Date Permits

$176,378,661

$156,007,015

$340,380,955

 Residential Starts

54

40

67

 Year To Date Starts

416

362

359

 Six Months Trailing

$151,268

$156,554

$321,906

 Median House Sold Price

$250,000

$250,000

$225,000

 Drilling Rigs In Panhandle

9

7

9

 Oil Price Per Barrel

$91.55

$96.30

$68.44

 Natural Gas

$7.86

$6.83

$3.86

 Wheat Per Bushel

$9.03

$9.27

$7.37

 Fed Cattle Per CWT

$138.00

$137.00

$121.00

 Corn Per Bushel

$6.11

$6.85

$5.62

 Cotton (Cents Per Pound)

$93.70

$90.70

$71.40

Milk

$20.25

$22.50

$16.00

Index*

221.60

223.10

208.00

*Base-100, January 1988

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. 

 

Timing and Forecasts

Economist tend to make forecasts and predictions. These universally turn out to be slightly or completely wrong. However, it is good to keep some things in mind, as we move through this economic cycle.

  • 1. Interest rate and money supply moves tend to have a six to nine month lag. Thus, the tightening that started two months ago will be having its main impact this coming Winter;
  • 2. Inflation tends to run longer than policy makers think;
  • 3. It is easier to raise prices in the front end of an inflationary cycle. Once competitive pressures increase and supply chain issues recede, price competition will come into play;
  • 4. Higher interest costs will reduce profits for most businesses and have the effect of raising the prices of vehicles and houses that are financed on credit. We have already seen the mortgage increase and are beginning to see increases for operating businesses and vehicle purchases;
  • 5. The stock market is supposedly a predictor of the economy six to twelve months in advance;
  • 6. The stronger dollar tends to put down more pressure on our area’s commodities;
  • 7. Amarillo’s unemployment is the lowest in Texas. Demand for workers should cushion macro-economic downturns

All of this analysis is very squishy, as timing never works out as planned and the effects are often different (worse or better) than expected. However, it is helpful to watch for these trends.

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