BUSINESS

The Federal Reserve released its periodic Beige Book report on economic conditions today, and here's what it said about the Dallas district, which includes all of Texas and parts of Louisiana and New Mexico:

Economic activity improved further in the Eleventh District over the past six weeks. Firms across a wide range of industries continued to report slight increases in demand. However, conditions in a few sectors, notably commercial real estate, financial services and construction-related manufacturing remained weak. Outlooks were generally more upbeat than last time.

That's consistent with the Dallas Fed's view that we're in a slow, gradual recovery. The good thing about a slow, gradual recovery is that it's better than a recession. The bad thing is that there's not a lot of hope for a huge increase in job creation.

Here's what the Dallas report says about jobs:

Most respondents noted steady employment levels. Still, there were scattered reports of layoffs at selected retail, high-tech, emergency vehicle and construction-related manufacturing firms. On a positive note, staffing firms continued to report increased hiring activity. In addition, there were reports of an uptick in staff levels at some energy service, food, high-tech and transportation manufacturing firms.

Wage pressures were nonexistent. A few firms reported they either had already given, or planned on giving small pay increases to employees this year. In contrast, real estate contacts noted that people were taking jobs at reduced salaries.

The outlook for construction-related manufacturing is "bleak." Conditions were mixed in transportation manufacturing and petrochemicals. And high-tech manufacturers report "continued strong growth in orders and production."

Housing activity is mixed. Commercial real estate "remains depressed."

Here are some other highlights:

Forbes ranked the Dallas-Fort Worth area No. 3 on a list of U.S. metro areas where the recession is easing. Austin-Round Rock was tied for No. 1 with Washington, D.C., home of the federal government.

Houston and San Antonio were also in the Top 10. Here's what Forbes said about Texas:

If one state is a poster child for economic recovery, it's Texas, home to four of the 10 cities on our list. There's more to why Austin, Dallas, San Antonio and Houston are faring well than just the state's energy industry. The tech, government and education industries supplement the oil state's riches. As for housing, cities in Texas didn't see the same run-up in home prices and rampant speculation that led to the spectacular bubble burst elsewhere in the country.

"The housing market got lucky, if you want to look at it that way," says James P. Gaines, research economist at the Real Estate Center at Texas A&M University. "We didn't have excessive overbuilding, so we don't have a big overhang of unsold new homes, and because Texas has among most affordable housing in the country, the demand sustained."

The list was based on jobs data, economic growth projections by Moody's Economy.com and median sales price of single family homes. Here's the Top 10 among the nation's 40 largest metro areas:

1. and 2. (tie): Austin-Round Rock, Washington, D.C.
3. Dallas-Fort Worth
4. and 5. (tie): Houston and Minneapolis-St. Paul
6. Denver
7. San Antonio
8. Boston
9. Los Angeles
10. Kansas City

Just the really big ones, that is. That's what Dallas Fed President Richard Fisher told a New York audience this morning.

Here's what he said about banks that are too big to fail, or TBTF:

The dangers posed by TBTF banks are too great. To be sure, having a clearly articulated "resolution regime" would represent steps forward, though I fear they might provide false comfort in that a special resolution treatment for large firms might be viewed favorably by creditors, continuing the government-sponsored advantage bestowed upon them. Given the danger these institutions pose to spreading debilitating viruses throughout the financial world, my preference is for a more prophylactic approach: an international accord to break up these institutions into ones of more manageable size--more manageable for both the executives of these institutions and their regulatory supervisors.

Fisher's made similar points before, but this struck me as a particular forceful statement, especially in the epicenter of Big Finance.

Fisher also argued against taking away the Fed's powers as a banking regulator. In theory, he said, the Fed's regulatory authority is separate from its responsibility for conducting monetary policy. But in practice, he said, the two functions complement each other.

Critics have argued that the Fed and other regulators dropped the ball during the massive housing bubble - a time when more effective banking regulation would have come in handy. Banking regulators could have cracked down on the most predatory home loans. They could have cooled off the easy-lending environment that helped fuel the rise in house prices. They could have restored a measure of common sense to an industry that was falling all over itself to lend to borrowers who couldn't prove their incomes or whether they even had a job.

Speaking of economic forecasts, the Western Blue Chip forecasts were updated this week. The forecasts are compiled by Arizona State University's W. P. Carey School of Business.

Texas continues to shine in the weak economy. It's expected to have 4.3 percent growth in personal income, more than any other western state. Payroll employment is expected to grow 0.8 percent, more than any western state except New Mexico, where a 1.1 percent increase is expected. Population is expected to grow 1.7 percent, tied for first with Colorado.

The consensus forecast for personal income growth in Texas ticked up this month from last month's 4.2 percent forecast. The forecast for retail sales also rose, to 3.5 percent from 3.2 percent. But expectations for the payroll employment got slightly worse, falling to a forecast of 0.8 percent growth from 0.9 percent last month.

Al Niemi, Dean of SMU's Cox School of Business, shared his latest thoughts on the economy at a talk in Plano today. It wasn't a bright outlook. He says he expects "a painfully sluggish recovery, one of the slowest we've seen."

That means economic growth of at most 3 percent this year, and a U.S. jobless rate that will bounce around between 9 percent and 10 percent. "2010 and 2011 are both going to be relatively sluggish years," he said, adding that he thinks there's a one-in-three chance the economy will slide back into recession in 2011.

Niemi added that he expects the North Texas economy to be better than the national average. But I think he'd be the first to agree that we're closely connected to the rest of the nation. So if the U.S. economy is as slow as he expects it to be in the next couple years, we'll feel it here, too.

Niemi also offered some interesting historical perspective on the 25 years between 1982 and 2007. For people like me who came of age during that period, it seemed normal. But it wasn't normal in economic terms, Niemi says. It was great.

"There's never been anything like it in the history of this great economy, and we may never see anything like it again"

As many as 25,000 unemployed Texans stand to lose their unemployment benefits this week as a result of a Senate stalemate over legislation that would extend funding for the benefits. The extension is included in a bill that has been held up by Sen. Jim Bunning, a Kentucky Republican who objects to the fact that it would add to the deficit. The bill also extends federal subsidies for employer-sponsored health insurance through the COBRA program.

Unemployment insurance is a joint federal-state program that first pays benefits out of state funds. Currently, about 630,000 Texans receive some amount of unemployment insurance, said Ann Hatchitt, a spokeswoman for the Texas Workforce Commission. In Texas, the state pays benefits for up to 26 weeks. The expired law allowed Texas workers to qualify for up to 67 more weeks of federally-funded benefits, Hatchitt said. Now, Texans who exhaust their 26 weeks of state benefits won't receive any additional federal payments as long as the stalemate continues.

The stalemate could end soon, if Senate Democrats file a procedural motion, known as cloture, which ends debate on the bill. But under Senate rules, that would require waiting about four days before the legislation could be considered on the floor. Otherwise, Senate Republicans would have to persuade Bunning to drop his hold on the bill.

In the meantime, Senate Democrats are portraying Republicans as obstructionists whose maneuver stands to hurt families relying on unemployment insurance to buy food and pay bills. "It is immoral, it is obscene to say to those people, 'we are stopping the extension of your unemployment benefits. And you are on your own,'" said Sen. Bernie Sanders, D-Vt. Sen. John Cornyn, R-Texas, says he doesn't support Bunning's move but hasn't spoken to the Kentucky senator. "I think there's a better way to make the point," Cornyn said. "Where I do think Senator Bunning has a point is on continued deficit spending flies in the face of what we're hearing from the American people."

I wrote this weekend about the newest -- and by far the most ambitious -- casino in Oklahoma that does about 90 percent of its business from North Texas gamblers. I was a bit surprised at the swell of comments on the story that argued for legalized gambling in Texas, which has been a sort of third rail for politicians as long as I've been here.

But the numbers are interesting from an economic development standpoint: $1.5 billion in revenue for the tribes in Oklahoma with western border casinos; $3 billion for the whole state, $106 million of which went to state coffers. And the job creation is thousands of jobs and indirect spending as well. Whether you're morally against gambling or not, it's hard to be against the economic impact in this recession.

That said, I don't see it being discussed at all in the governor's race or really talked much about at all in Austin. I don't know what the numbers are going to have to be in Oklahoma and Louisiana combined (Shreveport's casinos did about $792 million in the last year reported) before anybody or any party starts talking aloud about the potential to keep that impact here at home.

I didn't drop a dime in the place myself -- having a home mortgage "cured" me of my every-18-months itch for craps that needed a scratch. But the casino, if you've seen from the video extra, is a step up from the typical Indian casino. I'm curious if its price points and high-end features might be, at least initially, TOO fancy for the crowd that typically favors border casinos, but if you haven't seen either the television advertising or billboards touting the new Choctaw property, you don't own a television or don't do a lot of driving. I'd wager that marketing campaign was the largest non-political marketing campaign the region has seen in a long, long time. (I asked the good folks up there how much they spent; they were mum.)

So let's hear it blog readers: Is Texas literally leaving too much on the tables up in Oklahoma and Louisiana not to at least bounce the idea of our own gaming down here?

The National Federation of Independent Business will host five webinars this month for small business owners.

All of the webinars begin at 11 a.m. and are free to NFIB members. The March 31 one is free for everyone.

March 3: "Employee benefits: legal essentials for small business" by lawyer Linda Rosenzweig.

March 10: "A top 10 list of search engine optimization strategies" by Network Solutions' Randy Windsor.

March 17: "How to sell: establishing your unique selling proposition" by John W. Heinrich, president of the Solutions Forum and chief mentor of the International School of Entrepreneurship.

March 24: "Tax Day 2010: what to watch for this year and how to plan for next year" by NFIB tax counsel Bill Rys.

March 31: "Last-minute tax tips for small business" by small business lawyer and author Cliff Ennico.

Dallas-area residential values will continue to trend lower through most of 2009, according to a new report from Economy.com and Fiserv.
The forecast for housing markets across the country estimates that local home prices will be down by about 2 percent through September. That compares to a nationwide forecast of a 6 percent decline during the same period.
The same home price outlook projects a scant 0.2 percent increase in home values here between Sept. 2010 and Sept. 2011.
In January local sales stats showed that median home sales prices were up about 1 percent in North Texas from a year earlier.
Economy.com and Fiserv said the worst 1-year change in home prices was in 1987 when values in the Dallas area fell by 7.7 percent.
You can see all the results at CNNMoney.com.

The Dallas-area is among the U.S. markets with the largest declines in average apartment rent, according to a new report from Internet marketing firm RentJungle.com.
Overall Dallas rents have dropped by about $94 or 8 percent in the last six months, RentJungle said.
Nashville and Denver had the largest, 9 percent, declines in the rent survey. Along with Dallas, rents in Phoenix, Los Angeles and Louisville were also down 8 percent.
Rents were up slightly in Wichita, Indianapolis , Miami and Memphis.
RentJungle says that nationwide average rents have fallen about $40 a month during the last six months - a drop of 4 percent.

A closely watched gauge of future development activity showed a sharp decline in January.
The American Institute of Architects' Architecture Billing Index fell by almost three points last month, indicating further declines in construction design services.
"Projects are being delayed or cancelled because lending institutions are placing unusually stringent equity requirements on new developments," AIA Chief Economist Kermit Baker said. "This is even happening to financially sound companies with strong credit ratings."
The industry finds that the billing index closely reflects what construction spending will be doing in nine to 12 months.

Forget about the Great Recession. The economic cataclysm we just lived through should be called the Great Panic.

So says Dana Johnson, Comerica Inc.'s chief economist. The recession's signature events were declines in employment and business investment that were much greater than historical experience would have suggested, he says. Fueling the declines was widespread panic - and not just in the financial markets.

What is far less discussed, however, is that the turmoil in the financial markets provoked panic in the non-financial business sector. The massive disruptions of credit flows triggered fears that the U.S. economy could be headed for an extended period of recession that might resemble the 1930s. Business leaders reacted by cutting payrolls and fixed capital spending far more aggressively than usual.

During the recession, the economy shrank 3.8 percent, Johnson said, which is just a hair more than the contraction in the 1957-58 recession. But employment fell 6.1 percent, compared with a 4.6 percent decline in 1957-58.

About 15 percent of Dallas-area homeowners with mortgages owed more than their house was worth at the end of 2009.
But that's much better than the national average of almost 24 percent of U.S. home loan holders who are underwater with their debt, according to a new report from First American CoreLogic.
The situation is even worse in some states.
In Nevada, about 70 percent of home mortgage holders are upside down with their housing values compared to debt.
And in Arizona, more than 51 percent of homeowners with loans have negative equity.
In Texas, the negative equity rate was about 12 percent.
Homeowners who owe more than their house is worth are much more likely to let the property fall into foreclosure, adding to the downward pressure on home values.

The U.S. Small Business Administration will host six free "Youthpreneur" Webinars this week to celebrate National Entrepreneurship Week.

Budding entrepreneurs can learn the basics of entrepreneurship, business strategies, the importance of credit scores and using social networking to advance business ideas. The Webinars will take place at 10 a.m. and 2 p.m. CT on Tuesday through Thursday.

Here are the Webinars:

• Tuesday: Jennifer Matthews, president of Creating Financial Literacy, on "Why My Credit Score Matters Now," at 10 a.m. and Vince Shorb, president of the National Youth Financial Educator's Council, on "Financial Education/Entrepreneurship" at 2 p.m.
• Wednesday: Steven Harris, president of JS Investment Group, on "Youth Entrepreneurship and Financial Literacy at 10 a.m. and Michael Simmons, co-founder of Extreme Entrepreneurship Tour, on "Why Every Student Should Be an Entrepreneur" at 2 p.m.
• Thursday: Shonika Proctor, chief executive of Renegade CEO's, on "Me...Myself...and Why? A Business Roadmap for Determined Teens Who are Making Their Way" at 10 a.m. and Jason Duff, founder of Community Storage & Properties Ltd., on "How to Leverage Top Internet Tools to Grow and Market Your Business at No Cost" at 2 p.m.

To access the Webinars, go to www.ReadyTalk.com. Click "join a meeting" and enter access code 3761101. Then dial 866-740-1260 and enter access code 3761101 followed by the # key.

Texas manufacturing activity cooled off in February, according to a report released Monday by the Dallas Fed.

Factory production continued to expand this month but at a slower pace than last month, according to the Dallas Fed's monthly survey of Texas manufacturers.

Moreover, several survey indicators actually slipped into negative territory, "reversing recent months' improvements," the Dallas Fed said.

Shipments and growth rate of orders both turned negative. So did new orders, with the share of survey respondents reporting decreases in new orders tripled in February from the month before.

The employment index edged farther down into negative territory. The company outlook index - which reflects respondents' views on their own companies' prospects - turned negative after positive readings in recent months.

The number of people looking online at homes for sale jumped by almost 38 percent in the Dallas area in January from the previous month, the National Association of Realtors reports.
Out of the 143 markets that the trade group tracks, the biggest increase in Internet home searches was in Santa Fe, N.M., where web searches rose 52.5 percent. The Monmouth-Ocean area of New Jersey was the second fastest growing location for Internet home shoppers, up about 49 percent last month.
The Realtors' survey is based on traffic on the popular Realtor.com website.

Please take a read over at the Energy and Environment blog about what I've found out about premium gas prices.

Gas prices overall aren't all that bad compared to the spikes we saw in 2008. The idea is that since we're all driving less and using less gas, the supply of premium gas has fallen as refiners look to cook more regular gas. The price gap between regular and premium unleaded is what caught my eye - that gap seems to have widened considerably in recent weeks. What have you folks noticed?

Statewide construction volumes are expected to increase this year - mostly due to a rebound in homebuilding.
McGraw-Hill Construction is forecasting a 16 percent rise in Texas construction starts in 2010. The biggest building gain will be in Austin - about 30 percent. In Dallas, construction starts are expected to rise 16 percent.
The statewide forecast calls for a 31 percent increase in single-family home construction this year.
Nonresidential building is expected to fall 1 percent.

Dan S. Petty, current president and Chief Executive Officer of the NTC, will assume a consulting role in the group that researches regional economic issues and tries to promote the good stuff happening around North Texas as an economic engine. Here's a snippet from their release:

The NTC is undergoing a strategic plan to make the organization more focused to be the leading advocate for the North Texas Region. Established to guide the regional collaboration efforts to build DFW International Airport, the organization has remained on the forefront of key regional issues such as water, clean air and transportation.

"Dan has been an instrumental leader in the North Texas region and the North Texas Commission for over two decades directing us in projects including the successful Super Bowl XLV bid, our support efforts with DFW International Airport and establishing Leadership North Texas," said Wendy Lopez, NTC Chairman and Vice President of URS Corporation. "We are appreciative that Dan has agreed to remain on the team through the leadership transition."

So watch for more news from NTC as they pick their next leader.

Five Texas-based companies made the Women's Business Enterprise National Council's annual list of U.S. companies that create level playing fields for women-owned businesses to compete for corporate contracts.

The Texas-based companies are: AT&T Inc., Dell, Energy Future Holdings, Exxon Mobil Corp. and Shell Oil Co.

The Council announced the list of a record 21 companies for 2009 on Thursday. The other companies on the list are: Accenture, Alcatel-Lucent, Avis Budget Group Inc., Chevron, Ernst & Young, IBM, Johnson & Johnson, Manpower, Marriott International Inc., Microsoft, Office Depot, PepsiCo Inc., Pfizer Inc., Home Depot, UPS and Verizon.

WBENC president Linda Denny said the 21 companies have outstanding supplier diversity programs with measurable results in business partnerships with women-owned businesses.

The Council's Southwest regional chapter, called Women's Business Council Southwest, is based in Arlington.