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Signs of Slowdown Growing in Texas; Price Pressures Ease – 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).
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.
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.
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.
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).
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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Darden Restaurants is adding Tex-Mex to the menu.
The parent company of Olive Garden, LongHorn Steakhouse, Yard House and other chains, said Wednesday it’s buying Chuy’s for approximately $605 million.
Darden said it will acquire all outstanding shares of Chuy’s for $37.50 per share. Those shares closed at $25.27 apiece on Wednesday, then soared past $37 in after-hours trading once the deal was announced. Darden shares fell 1% in after-hours trading.
Darden said the boards of Darden and Chuy’s have unanimously approved the acquisition. The deal is expected to close later this year, if it’s approved by Chuy’s shareholders.
Chuy’s Holdings Inc. was founded in Austin, Texas, in 1982. It now operates 101 restaurants in 15 states and has 7,400 employees. It’s known for its eclectic decor and fresh food, including handmade tortillas and sauces.
Like Darden, Chuy’s owns and operates all of its restaurants. Darden President and CEO Rick Cardenas said Chuy’s is a differentiated brand with strong growth potential that will expand Darden’s dining options.
Darden, based in Orlando, Florida, operates more than 1,900 restaurants and has 190,000 employees. It also owns Ruth’s Chris Steak House, Cheddar’s Scratch Kitchen, The Capital Grille, Seasons 52, Eddie V’s and Bahama Breeze.
“Based on our criteria for adding a brand to the Darden portfolio, we believe Chuy’s is an excellent fit that supports our winning strategy,” Cardenas said in a statement.
Chuy’s Chairman, CEO and President Steven Hislop said the acquisition will accelerate Chuy’s business goals and expand the brand to more communities.
The deal comes as both restaurant companies have been struggling with a downturn in customer traffic due to consumer concerns about inflation.
In Darden’s fiscal fourth quarter, which ended May 26, same-store sales — or sales at restaurants open at least a year — were flat compared to the prior year. Chuy’s same-store sales were down 5% in its first quarter, which ended March 31.
Investment bank Jefferies downgraded shares for both restaurant chains earlier this month, saying they’re being squeezed by price promotions at fast-food chains like McDonald’s as well as at casual dining peers like Chili’s and Applebee’s.
AUSTIN, Texas (AP) — The Texas Supreme Court upheld the state’s ban on gender-affirming care for transgender youths Friday, rejecting pleas from parents that it violates their right to decide on and seek medical care for their children.
The 8-1 ruling from the all-Republican court leaves in place a law that has been in effect since Sept. 1, 2023. Texas is the largest of at least 25 states that have adopted laws restricting or banning gender-affirming medical care for transgender minors.
The Texas law prevents transgender people under 18 from accessing hormone therapies, puberty blockers and transition surgeries, though surgical procedures are rarely performed on children. Children who had already started the medications had to taper off their use.
“We conclude the Legislature made a permissible, rational policy choice to limit the types of available medical procedures for children, particularly in light of the relative nascency of both gender dysphoria and its various modes of treatment and the Legislature’s express constitutional authority to regulate the practice of medicine,” Justice Rebeca Aizpuru Huddle wrote in the court’s decision.
The lawsuit that challenged the Texas law argued it devastates transgender teens who are unable to obtain critical treatment recommended by their physicians and parents. The Williams Institute at the UCLA School of Law estimates about 29,800 people ages 13-17 in Texas identify as transgender.
The only justice dissenting with Friday’s ruling said the Texas Supreme Court was allowing the state to “legislate away fundamental parental rights.”
“The State’s categorical statutory prohibition prevents these parents, and many others, from developing individualized treatment plans for their children in consultation with their physicians, even the children for whom treatment could be lifesaving,” Justice Debra Lehrmann wrote in a dissenting opinion. “The law is not only cruel — it is unconstitutional.”
A lower court had ruled the law unconstitutional, but it was allowed to take effect while the state Supreme Court considered the case.
Texas’ Republican attorney general, Ken Paxton, vowed in a post on the social platform X after the ruling that his office “will use every tool at our disposal to ensure that doctors and medical institutions follow the law.”
Advocates criticized the ruling.
“It is impossible to overstate the devastating impact of this ruling on Texas transgender youth and the families that love and support them,” said Karen Loewy, senior counsel and director of Constitutional Law Practice at Lambda Legal, which was among the groups that sued the state on behalf of doctors and families.
“Our government shouldn’t deprive trans youth of the health care that they need to survive and thrive,” said Ash Hall, policy and advocacy strategist for LGBTQIA+ rights at ACLU of Texas. “Texas politicians’ obsession with attacking trans kids and their families is needlessly cruel.”
The law includes exemptions for children experiencing early puberty or who have “a medically verifiable genetic disorder of sex development.”
Such exemptions underscore the law’s discriminatory nature, said Dr. Jack Drescher, a psychiatry professor at Columbia University who edited the section about gender dysphoria in the American Psychiatric Association’s diagnostic manual. Gender dysphoria is the psychological distress experienced by those whose gender expression does not match their gender identity and is a required diagnosis before treatments can begin.
“They’re saying if you’re not a transgender child and you need these drugs, you can have them, but if you’re a transgender child who might benefit from these drugs, then sorry, you have to move to another state,” Drescher said.
The restrictions on health care are part of a larger backlash against transgender rights, touching on everything from bathroom access to participation in sports. Former President Donald Trump has vowed to pursue other measures that would restrict the rights of transgender people if he wins the November election, including a ban on gender-affirming care for minors at the federal level.
As more states move to enforce health care restrictions, families of transgender youths are increasingly forced to travel out of state for the care they need at clinics with growing waiting lists. At least 13 states have laws protecting care for transgender minors.
Most of the states that have passed restrictions face lawsuits, and the U.S. Supreme Court recently agreed to hear an appeal from the Biden administration attempting to block state bans on gender-affirming care. The case before the high court involves a Tennessee law that restricts puberty blockers and hormone therapy for transgender minors, similar to the Texas law.
Gender-affirming care for transgender youths is supported by major medical organizations, including the American Medical Association, the American Academy of Pediatrics, the American Psychiatric Association and the Endocrine Society.
In a concurring opinion, one justice dismissed the position of the medical groups.
“The fact that expert witnesses or influential interest groups like the American Psychiatric Association disagree with the Legislature’s judgment is entirely irrelevant to the constitutional question,” Justice James Blacklock wrote. “The Texas Constitution authorizes the Legislature to regulate ‘practitioners of medicine.’”
Texas officials defended the law as necessary to protect children and noted a myriad of other restrictions for minors on tattoos, alcohol, tobacco and certain over-the-counter drugs.
Several doctors who treat transgender children testified in a lower court hearing that patients risk deteriorating mental health, which could possibly lead to suicide, if they are denied safe and effective treatment.
The ban was signed by Republican Gov. Greg Abbott, the first governor to order the investigation of families of transgender minors who receive gender-affirming care.
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DeMillo reported from Little Rock, Arkansas.
For all the time I spend digging, planting, pulling and weeding, one would think I’d have some poison ivy horror stories to tell, but I do not. I can’t say for sure whether I’m immune to the rash that tortures so many of my fellow gardeners or if I’ve just been lucky, but one thing is for sure: The plant does pose a serious problem for many who come into contact with it.
Botanically known as Toxicodendron radicans, poison ivy contains oily chemical compounds called urushiols in its leaves, stems and roots. According to the American Skin Association, about 85% of the U.S. population is allergic to urushiols, with roughly 10% to 15% of those considered “highly allergic.”
That makes the plant concerning — and possibly dangerous — for most Americans, with 50 million people affected each year, the group says. So, in most cases, it should be removed.
But the itchy, blistering and sometimes painful dermatitis that affects most people who brush up against poison ivy can discourage efforts to tackle it.
It’s a Catch-22: You need to remove it because you’re allergic but you’re allergic so you can’t remove it.
First, know how to identify it
Making a positive ID can be tricky.
Poison ivy takes on different appearances at different times of year. Most often, its leaves are composed of three leaflets apiece (as referenced in the childhood rhyme, “leaves of three, let it be”). The middle stem is longer than the stems of the side leaflets. Young foliage is shiny; older leaves are dull. Larger, older vines, especially those climbing up trees, are hairy. Leaf color can be green, red, pink-tinged, yellow or orange. Leaf shape can also vary, with smooth, lobed or toothed margins.
This article is part of AP’s Be Well coverage, focusing on wellness, fitness, diet and mental health. Read more Be Well.
I’ll confess, it confuses me, too. I once pulled up a raspberry plant (RIP) that I misidentified as poison ivy.
Consult with a poison ivy expert, bring a (bagged) sample to your local cooperative extension office, download a plant identification app or compare photos of your vine to those in books or on an educational website.
Then, either call in a professional or, if removing it yourself, carefully implement protective measures.
How to remove it safely
Wear long sleeves, pants, gloves and goggles, and don’t touch anything, especially your face, during the process. Avoid contact with tools or clothing used during the job, and remove all clothing afterward so as not to allow it to come into contact with skin or other surfaces.
The best way to eradicate poison ivy is to pull it up by its roots. If you garden in a four-season area, the job will be easiest in early spring, after winter’s freeze-thaw cycles have softened the ground. Otherwise, waiting until after rainfall is best for the same reason.
Pulling, you’ll notice, will likely leave some of the roots behind, as they can grow up to a foot deep. The entire root system must be completely dug up to avoid a reoccurrence, but if you’re tired, that can wait until tomorrow.
As you dig, you’ll notice the plant also has runner roots that have grown horizontally under the soil surface. Depending on the size of the plant, they can extend up to 20 feet from it. Remove them, too.
How to clean up properly afterward
Proper disposal of all plant parts is critical. Place them in a tightly sealed, heavy black plastic bag and set it out with the trash. Never burn poison ivy, because the smoke would contain toxins that could be fatal if inhaled.
When you’re finished, don’t touch your door. Don’t get yourself a drink. Don’t open the washing machine. Don’t. Touch. Anything.
This is easiest if you have someone to open the door, put your clothes into the washer, etc. If not, take care to do things in the proper order to avoid cross-contamination: Strip naked, remove your gloves then wash your hands with a liquid cleanser specially formulated to remove traces of the resins. One is Tecnu, which also can be used to launder contaminated clothing.
Then, bring the bottle into the shower with you. Avoid bathing with ordinary soap because it can spread the oils to other parts of your body.
Urushiols can also be transmitted to people via gardening tools, footwear, clothing and pets for as long as a year or two after contact, so anything that touched the plant should be thoroughly cleaned, too. Then wash your hands again. You can’t be too careful.
As time goes on, some sprouts will likely reappear, so repeated pulling and digging may be required over the next several seasons.
Other options
If pulling is not possible, herbicides containing triclopyr or glyphosate can be used to kill the plant. I do not advocate the use of these chemicals except in extreme circumstances, such as to control Japanese knotweed. But if you are severely allergic, I consider poison ivy removal in that category.
Just know that these herbicides will kill every plant they come in contact with, including grass. They also have toxic properties that will remain in the soil for some time. Use them only on a windless day to avoid overspray and take care to directly target only the poison ivy. Apply to leaves as directed, following precautions on the package label.
Plants should wilt within 24 hours, turn brown within three days and die in a couple of weeks, at which point they can be removed. Take the same precautions as above because dead (and dormant) plants still contain toxins. Repeat applications may be necessary.
And don’t get cocky. Just because you’re not allergic today doesn’t mean you won’t be tomorrow. Always protect yourself.
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Jessica Damiano writes weekly gardening columns for the AP and publishes the award-winning Weekly Dirt Newsletter. You can sign up here for weekly gardening tips and advice.
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For more AP gardening stories, go to https://apnews.com/hub/gardening.
