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Perry's Growth Failure in Texas

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Sunday, 14 August 2011 20:08

After getting my numbers wrong last time, I thought I would take one more look. Folks love to look at per capita GDP growth as a measure of economic progress. It's certainly not everything, but it does tell you something.

So how does Texas look under Governor Perry compared to his predecessors? Using data from the Bureau of Economic Analysis (I had to chain these two series), I get that in the years 1987-2000 per capita GDP growth averaged 2.2 percent in the U.S. as a whole. In Texas it averaged 2.8 percent, a 0.6 percentage point gap. However, in the years 2000-2010 the gap goes the other way. Per capita GDP in the U.S. as a whole grew at an average rate of 0.6 percent, while it grew at a 0.5 percent rate in Texas, a difference of 0.1 percentage point in favor of the U.S. 

Texas_growth_27052_image002Source: Bureau of Economic Analysis.

What does this say about Governor Perry's success as the steward of the Texas economy? It doesn't tell us much. There are all sorts of reasons that Texas's per capita GDP growth might have slowed relative to the rest of the country that have nothing to do with the effectiveness of Perry's policies. However, if we are looking for quick comparisons, per capita GDP growth is a common one, and it goes the wrong way for the Perry economic miracle story. 

Comments (9)Add Comment
job growth or job poaching
written by bruce, August 14, 2011 10:12
a question that i have is i wonder how much of the job growth in texas has to do with their aggressive approach to attract businesses to move to texas from other states. if most of the job growth in texas comes from other states i doubt that translates well to a national job creation creditional.
...
written by izzatzo, August 14, 2011 10:39
If you think per capita income in Texas is low now just wait till Perry is elected and they outlaw birth control to bring back the tradition of large families.
small
written by Daniel, August 14, 2011 10:57
Moving from half a percentage point higher to one tenth of a percentage point lower sounds to me like statistical insignificance.
Not sure Perry's record is really meaningful no matter how you look at it
written by Brett, August 14, 2011 11:48
In my opinion, he's just be fortunate to be Governor at a time when oil prices, in general, have been much higher than in the recent past. The 90s were a decade of cheap oil, but since the Iraq War, oil prices have shot through the roof, and thus oil companies located in Texas have benefit greatly, creating lots of jobs and a lot people move here to get those jobs.

http://research.stlouisfed.org/fred2/series/OILPRICE

http://research.stlouisfed.org/fred2/series/GASREGW?cid=32217

But as a resident of Texas, I must say that I've noticed an enormous increase in pollution since Perry's been Governor. Houston and Dallas are much more smoggy today than they were a decade ago. If Perry hasn't contributed to that fact (by helping polluters in their quest to pollute), he certainly hasn't done anything about it.
...
written by Sam123, August 15, 2011 12:51
When we consider that Texas has a higher dependency ratio than the nation as a whole and the fact that the population of Texas increased by 20% over that time period while the population of the US grew by 9.7%, it is remarkable that per capita GDP rose in Texas at all. The population growth hides the real GDP growth of Texas because more and more people are sharing the same pie. This data indicates that the pie was able to grow fast enough to accommodate a population which grew over twice as fast as the nation. At the end of the day a .1% difference between the growth rate of per capita GDP is not enough to proclaim it "Perry's growth failure". You really should take the Paul Krugman route and focus on the minimum wage job creation. It has its fallacies as well but it is much stronger than this weak sauce you are serving up.
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written by skeptonomist, August 15, 2011 10:02
As I said in a previous comment, Texas's economy is dominated by the price of oil:

http://www.skeptometrics.org/TexasOil.png

and starting any analysis in 1987 is going to be affected by the fact that Texas was in a severe recession then because of the collapse of oil price (and the effects of banking deregulation). Therefore, almost any economic measure will show improvement since then. I am not going to work through the GDP data, but I will bet that it will show a pattern similar to that of unemployment. This then is why average growth was high 1987-2001 - that growth represents recovery from the 1986 oil-price-crash recession.

Krugman's recent blog posts and his column today have more specifics on why employment growth has been high in Texas more recently despite what is not really a good economic performance apart from oil profits.
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written by ltr, August 15, 2011 6:45
Excellent post, and Sam is ridiculous.
job growth?
written by david, August 16, 2011 12:39
Unemployment in Texas is high, thanks to a burgeoning population that is growing faster than the "job creators" can keep up with. And the jobs these "creators" create are low quality, cheap labor being fueled no doubt in part from the international immigrant workers who are willing to work for subpar wages (it's better than starving in Vietnam, true). But this all is reflected in the low GDP of the state. The Perry con job will soon enough be seen for what it is, I hope. But then I thought the same about my former governor, W.
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written by Sam123, August 16, 2011 8:16
Care to elaborate Itr, or can I just say you are ridiculous without addressing your arguments,(Oh wait, you didn't make any arguments.)

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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