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Signs of Slowdown Growing in Texas; Price Pressures Ease – Federal Reserve Bank of Dallas

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Economic analysis and insights from the Federal Reserve Bank of Dallas
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Mytiah Caldwell and Yichen Su

The Texas economy continued expanding in June and July, though at a decelerating pace compared with earlier this year. There are increasing signs of slowing activity—particularly weakening demand in manufacturing—even as overall job growth remains strong.
Business outlooks were negative, and price and wage pressures eased in July. Home prices in some metros appear to have peaked, and apartment rent increases are slowing.
Texas employment growth accelerated to an annualized 7.3 percent in June, exceeding the downwardly revised 5.6 percent rate in May. The state’s expansion was broad based during the second quarter. Texas outpaced the nation in all sectors except government (Chart 1).
Chart 1: Second-Quarter Texas Job Growth Exceeded U.S. in All Sectors, Except Government
Downloadable chart | Chart data
The fastest-growing sector was energy, where employment increased at an annualized 22 percent rate. The information, leisure and hospitality, and construction sectors also strongly expanded in the second quarter. Dallas and Houston led the major Texas metropolitan areas in employment during the quarter, with Dallas gaining 9.7 percent on an annualized basis and Houston rising 7.7 percent.
The Dallas Fed’s Texas employment forecast projects 4.5 percent growth this year (December over December), an upward revision from the previous forecast because of the strong June performance. Those gains pushed the growth rate in the first half of the year to an annualized 5.8 percent. While the employment forecast implies a slowing in the second half, the state should still exceed its historical average of 2 percent growth.
The Texas unemployment rate dropped to 4.1 percent in June from 4.2 percent in May. The jobless rates for Black and Hispanic workers decreased more than for white workers over the first half of the year. The improvement indicates that the racial gap in unemployment rates observed during the height of the COVID-19 pandemic has narrowed considerably this year.
The Texas economy expanded in June and July, although the pace of growth slowed considerably compared with earlier this year, according to Dallas Fed’s Texas Business Outlook Surveys (TBOS). The manufacturing production index increased from 2.3 to 3.8 from June to July, while the service sector revenue index was largely unchanged (Chart 2). TBOS indexes are diffusion indexes, with positive values typically indicating growth and negative ones reflecting contraction.
Chart 2: Texas Economy Continues to Expand, Though at a Slower Pace
Downloadable chart | Chart data
While manufacturing production growth remained positive, indexes of manufacturing demand such as new orders and the growth rate of orders indicated contraction in June and July, reaching their lowest levels since mid-2020.
The retail sector has struggled this year, with sales falling at an accelerating rate. Despite the weakness reported by retailers, state sales tax revenue rose 16.4 percent year over year in June, suggesting spending has gained relative to last year.
In June, TBOS survey respondents were asked a special question about constraints on revenue. Responses suggest that weak demand increasingly limited firms’ revenue; 26 percent of firms pointed to weak demand in June, compared with 15 percent in March 2022.
Supply-chain constraints and labor shortages remained the top challenges cited. Additionally, TBOS special questions in July show the share of businesses looking to hire workers has decreased since April, reaching its lowest point in over a year. Even with slightly reduced labor demand, most survey respondents reported that hiring remains troublesome, though the difficulty filling low- and mid-skill positions moderated in July relative to November 2021, when this question was last asked.
Despite the continued expansion, firms’ outlooks were pessimistic in June and July (Chart 3). Businesses expressed increasing uncertainty and worry about a potential economic slowdown.
Chart 3: Firms' Outlooks Worsened in June, July; Uncertainty Increased
Downloadable chart | Chart data
Still, since energy production makes up a larger portion of the Texas economy than it does of the national economy, the state usually outperforms the U.S. when oil and gas prices are high. Chart 4 plots the Texas job growth premium (Texas 12-month job growth rates minus the national 12-month job growth rate) and the concurrent series of benchmark West Texas Intermediate oil prices.
Chart 4: Texas Often Outperforms the U.S. Economy When Oil Price is High
Downloadable chart | Chart data
The chart depicts a strong degree of co-movement between those two series. In the event of a national slowdown or a recession, this relationship suggests that the Texas economy may outperform the nation given recent high oil and gas prices.
The housing market is showing signs of slowing. The months-of-supply of homes across Texas metros was higher in June than at the same time last year. In particular, Austin experienced a more rapid increase in homes for sale than other metros, and the number of sales dropped more quickly than in other areas. The rate of increase in home prices slowed in June, with the median price plateauing in Houston and San Antonio and declining slightly in Austin.
Rent growth similarly decelerated across Texas metros, with Austin experiencing the most pronounced slowdown after a year of rising rents that led other Texas metros in 2021. Apartment occupancy rates have remained high over the past few months.
The Dallas Fed’s Banking Conditions Survey shows continued growth in loan volume in June, though residential real estate lending was flat. Texas financial institutions expect loan demand to weaken in coming months.
Price pressures have grown—the Houston metro’s Consumer Price Index (CPI) for June, which reached an annualized 10.2 percent, topped the 9.1 percent national CPI reading. In particular, energy and food prices rose more in Houston than in the U.S.
However, TBOS results indicate that upward price pressure in Texas likely eased in July (Chart 5).
Chart 5: Upward Price Pressure Eased in July, Texas Business Outlook Survey Indicates
Downloadable chart | Chart data
The manufacturing input price index decreased sharply, from 57.5 in June to 38.4 in July. The service sector input and selling price diffusion indexes also declined after remaining at highs through June. Based on the survey results, inflation appears to have slowed in Texas in July.
Mytiah Caldwell
Caldwell is a research analyst at the Federal Reserve Bank of Dallas.
Yichen Su
Su is a research economist at the Federal Reserve Bank of Dallas.
The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System.
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Texas’ diversity, equity and inclusion ban has led to more than 100 job cuts at state universities

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Texas’ diversity, equity and inclusion ban has led to more than 100 job cuts at state universities

AUSTIN, Texas (AP) — A ban on diversity, equity and inclusion initiatives in higher education has led to more than 100 job cuts across university campuses in Texas, a hit echoed or anticipated in numerous other states where lawmakers are rolling out similar policies during an important election year.

Universities throughout Texas rushed to make changes after Republican Gov. Greg Abbott signed the law last year. On April 2, the president of the 52,000-student University of Texas at Austin — one of the largest college campuses in the U.S. — sent an email saying the school was shuttering the Division of Campus and Community Engagement and eliminating jobs in order to comply with the ban, which went into effect on Jan. 1.

More than 60 University of Texas at Austin staff members were terminated as a result of the law, according to the Texas Conference of the American Association of University Professors. The group said it compiled the list based on affected employees who had reached out and that the number could be greater. University officials declined to confirm the number of positions eliminated.

Officials at other schools, in response to inquiries from The Associated Press, indicated that a total of 36 positions were eliminated between Texas A&M University in College Station; Texas Tech University in Lubbock; Texas State University in San Marcos; The University of Houston; Sam Houston State University in Huntsville; and Sul Ross State University in Alpine. Officials said no one was let go; people were assigned to new jobs, some resigned and vacant positions were closed.

Earlier this week, University of Texas at Dallas officials announced that approximately 20 associate jobs would be eliminated in compliance with the law. University officials declined to comment on how many of those positions are currently filled.

Texas House of Representatives Speaker Dade Phelan, a Republican, applauded the University of Texas actions in a post on the social media platform X. “It is a victory for common sense and proof that the Legislature’s actions are working,” Phelan wrote.

Texas is among five states that have recently passed legislation targeting DEI programs. At least 20 others are considering it.

Florida was the first to implement a ban, last year, with the vocal backing of then-Republican presidential candidate Gov. Ron DeSantis, who often derides DEI and similar diversity efforts as “woke” policies of the left. In response to the law, the University of Florida last month announced more than a dozen terminations.

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FILE - In this Thursday, Nov. 29, 2012, photo, ivy grows near the lettering of an entrance to the University of Texas in Austin, Texas. A ban on diversity, equity and inclusion initiatives in higher education has led to more than 100 job cuts across university campuses in Texas, a hit echoed or anticipated in numerous other states where lawmakers are rolling out similar policies during an important election year. (AP Photo/Eric Gay, File)

 

FILE – In this Thursday, Nov. 29, 2012, photo, ivy grows near the lettering of an entrance to the University of Texas in Austin, Texas. (AP Photo/Eric Gay, File)

 

Universities of Wisconsin regents reached a deal with Republican lawmakers in December to limit DEI positions at the system’s two dozen campuses in exchange for getting funds for staff raises and construction projects. The deal imposed a hiring freeze on diversity positions through 2026, and shifted more than 40 diversity-related positions to focus on “student success.”

Republican legislators who oppose DEI programs say they are discriminatory and promote left-wing ideology. Some are counting on the issue to resonate with voters during this election year. Democratic DEI supporters say the programs are necessary to ensure that institutions meet the needs of increasingly diverse student populations. Lawmakers from the party have filed about two dozen bills in 11 states that would require or promote DEI initiatives.

Texas’ anti-DEI law, which Abbott enthusiastically signed last year, prohibits training and activities conducted “in reference to race, color, ethnicity, gender identity, or sexual orientation.” Additionally, the law, also known by its legislative title, SB17, forbids staff members from making hiring decisions that are influenced by race, sex, color or ethnicity, and prohibits promoting “differential” or “preferential” treatment or “special” benefits for people based on these categories.

SB17 states that the ban doesn’t apply to academic course instruction and scholarly research. That’s why professor Aquasia Shaw was so surprised to hear last week that her supervisor was not going to renew her contract. Shaw said she was not given a reason for the termination, but considering the timing, she suspects it’s the new law.

 
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FILE - Texas Gov. Greg Abbott speaks during a news conference Friday, March 1, 2024, in Borger, Texas. Texas' ban on diversity, equity and inclusion instruction has resulted in more than 100 jobs being cut at University of Texas campuses across the state — providing a glimpse of the potential impact of such bans being implemented in other Republican-controlled states. Abbott signed a law last year prohibiting DEI initiatives in public higher education. (Elías Valverde II/The Dallas Morning News via AP, File)

 

FILE – Texas Gov. Greg Abbott speaks during a news conference Friday, March 1, 2024, in Borger, Texas. (Elías Valverde II/The Dallas Morning News via AP, File)

 

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Shaw taught courses on the intersection of sociology, sports and cultural studies in the Department of Kinesiology and Health Education at the University of Texas at Austin. Her faculty page on the university’s website states her focus as “sociology of sport and cultural studies, sport management and diversity, inclusion and social justice.” A course she taught this semester was titled Race and Sports in African American Life. But she said she had not been involved in any DEI initiatives outside of her teaching.

“I was under the impression that teaching and research was protected so … I am trying to grapple with the idea and in denial that this can’t be the reason I was targeted,” she said.

In March, Republican state Sen. Brandon Creighton, who authored SB17, sent a letter to public university boards of regents across the state, inviting them to testify in May about the changes that have been made to achieve compliance. He included a warning that renaming programs, rather than changing their intent, would not be sufficient.

Creighton’s office did not respond to an emailed request for comment.

The law’s impact was felt in Texas even before it went into effect. In anticipation, University of Texas at Austin officials last year changed the school’s Division of Diversity and Community Engagement to the Division of Campus and Community Engagement. The name change didn’t save it — it was closed this month. School officials said some of the division’s projects would be relocated, while others would be shut down. They did not provide specifics.

Shaw said she was the only person of color in her department. She said she saw on X that other university employees had been let go and began connecting with them. At least 10 of the other terminated faculty and staff members whom she contacted are also from minority groups, she said.

The loss of her job was a big blow to Shaw, who had already scheduled classes for this summer and fall. She said her superiors had previously told her they hoped to renew her contract.

“I am so disheartened to see that exactly what I was concerned about ended up happening anyway,” Shaw said.

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Dallas doctor convicted of tampering with IV bags linked to coworker’s death and other emergencies

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Dallas doctor convicted of tampering with IV bags linked to coworker’s death and other emergencies

DALLAS (AP) — A Dallas anesthesiologist was convicted Friday for injecting a nerve-blocking agent and other drugs into bags of intravenous fluid at a surgical center where he worked, which led to the death of a coworker and caused cardiac emergencies for several patients, federal prosecutors said.

A jury convicted Raynaldo Riviera Ortiz Jr., 60, of four counts of tampering with consumer products resulting in serious bodily injury, one count of tampering with a consumer product and five counts of intentional adulteration of a drug, prosecutors said. A sentencing date has not yet been set for Ortiz, who faces up to 190 years in prison.

“Dr. Ortiz cloaked himself in the white coat of a healer, but instead of curing pain, he inflicted it,” U.S. Attorney Leigha Simonton for the northern district of Texas said in a video statement.

Prosecutors said that evidence presented at trial showed that numerous patients at Surgicare North Dallas suffered cardiac emergencies during routine medical procedures performed by various doctors between May 2022 and August 2022. During that time, an anesthesiologist who had worked at the facility earlier that day died while treating herself for dehydration using an IV bag.

Prosecutors said Ortiz, who was arrested in September 2022, had surreptitiously placed the tainted IV bags into a warming bin at the facility and waited for them to be used in his colleagues’ surgeries.

Evidence presented at trial showed that at the time of the emergencies, Ortiz was facing disciplinary action for an alleged medical mistake made in one of his own surgeries, prosecutors said.

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Texas woman sues prosecutors who charged her with murder after she self-managed an abortion

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Texas woman sues prosecutors who charged her with murder after she self-managed an abortion

McALLEN, Texas (AP) — A Texas woman who was charged with murder over self-managing an abortion and spent two nights in jail has sued prosecutors along the U.S.-Mexico border who put the criminal case in motion before it was later dropped.

The lawsuit filed by Lizelle Gonzalez in federal court Thursday comes a month after the State Bar of Texas fined and disciplined the district attorney in rural Starr County over the case in 2022, when Gonzalez was charged with murder in “the death of an individual by self-induced abortion.”

Under the abortion restrictions in Texas and other states, women who seek abortion are exempt from criminal charges.

The lawsuit argues Gonzalez suffered harm from the arrest and subsequent media coverage. She is seeking $1 million in damages.

“The fallout from Defendants’ illegal and unconstitutional actions has forever changed the Plaintiff’s life,” the lawsuit stated.

Starr County District Attorney Gocha Ramirez said Friday that he had not yet been served the lawsuit and declined comment. Starr County Judge Eloy Vera, the county’s top elected official, also declined comment.

According to the lawsuit, Gonzalez was 19 weeks pregnant when she used misoprostol, one of two drugs used in medication abortions. Misoprostol is also used to treat stomach ulcers.

After taking the pills, Gonzalez received an obstetrical examination at the hospital emergency room and was discharged with abdominal pain. She returned with bleeding the next day and an exam found no fetal heartbeat. Doctors performed a caesarian section to deliver a stillborn baby.

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The lawsuit argues that the hospital violated the patient’s privacy rights when they reported the abortion to the district attorney’s office, which then carried out its own investigation and produced a murder charge against Gonzalez.

Cecilia Garza, an attorney for Gonzalez, said prosecutors pursued an indictment despite knowing that a woman receiving the abortion is exempted from a murder charge by state law.

Ramirez announced the charges would be dropped just days after the woman’s arrest but not before she’d spent two nights in jail and was identified by name as a murder suspect.

In February, Ramirez agreed to pay a $1,250 fine and have his license held in a probated suspension for 12 months in a settlement reached with the State Bar of Texas. He told The Associated Press at the time that he “made a mistake” and agreed to the punishment because it allows his office to keep running and him to keep prosecuting cases.

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