Amarillo’s economy continues its upward moves, with strength from job growth, construction, tourism and higher commodity prices.
Retail Sales are up 6.6%, which is down from the 11% YTD. The increase is probably less than the rate of inflation, so there is some slowing. New Vehicle Sales are down 27%, due to supply constraints, and Used Vehicles Sales are down 15%.
Tourism continues strong, with a 7% increase in the Motel bed tax and a 21% increase in Airline Boardings (back to levels before Covid).
Workers’ Employed are up 3,100 in the Employer’s Survey and 2,300 in the Household Survey (which has more part-time). Wages are shown down, but we see that as a reporting anomaly, since all businesses are reporting pressure on wages.
Housing Construction is at the highest level in a long time, with 82 starts up from 52 last month. YTD is 322 vs. 180 this time last year. However, interest rates on mortgages have jumped sharply, and the constricted supply is keeping the market going, but there may be demand fall offs in the future. The Median House Price is $240,000, up 8% from last year. Commercial construction is good, with a $9 million U-Haul building as the top project.
Energy continues to shine, with Oil up 68% and Gas up 123%. 8 drilling rigs are double the level last year, and royalty income is up across the Panhandle.
Commodity prices look good, but the Ag sector has been hurt by the drought, which cut wheat yields. Cattle prices are up 11%, but input costs are up even more due to corn being up 34%. Cotton prices are up 57% and Milk up 48%, keeping these two areas strong.
The Wall Street Journal reports that Amazon is rethinking their expansion strategy and may be cutting back on some of their warehouses. The opening of the Amarillo warehouse has been delayed twice, and is now scheduled for August (from press reports); but the national media is reporting that Amazon may take a different path in the future.
Inflation is in every discussion, and we have a further analysis in this report.
*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.
Inflation is now on everyone’s mind, with most comments being that it is “too much”.
We are cursed with the double whammy of both types of inflation:
The problems appear compounded because of the inability of fiscal and monetary leaders in Washington to recognize the causes of the problem. We have reported on inflation regularly over the last year; and policy makers have been on a different page.
Our inflationary pressures come from:
A 9% drop in output was juiced by a 27% level of “stimulus”, (which appears to be three times what was needed).
Interest Rates were driven too low and stayed too long.
The compound errors in both of these policies have combined to cause the current level of “too much” inflation.
Interest costs will more than double.
Much higher risk of a recession.
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