Texas GDP up 3.7% this year, BBVA report says

by Houston Business Journal - Christine Hall, reporter

Texas’ gross domestic product is expected to grow by 3.7 percent in 2011, propelled by the state’s top job creation and higher energy prices, according to BBVA Compass’ second quarter economic outlook report.

The state’s energy sector has benefited from technological advances, including new drilling methods, as well as output growth in times of high oil prices, according to the report by BBVA’s Houston-based research unit.

Among the areas of expected growth is the state’s industrial concentration. The report notes that Houston’s employment in the oilfield-related mining support activities sector increased nearly 17 percent during the past year.

In addition, employment in the software design services, truck and water transportation and retail trade sectors are expected to continue driving rapid gains in Houston, the report said.

Meanwhile, Texas’ retail sales are up about 4 percent as of January. Houston retail sales were at their highest in early 2010, but have since leveled off.

“As a whole, Texas’ consumers are in a far better position than other states; the most recent New York Fed data on credit conditions illustrates that their total and mortgage debt burdens are the second lowest above Ohio,” the report said.

Overall, the report gives the U.S. an outlook of 3 percent GDP growth in 2011, but cites that the labor market will still lag behind that growth, creating just 1.3 million new jobs in the last 12 months. Though the unemployment rate has fallen to 8.8 percent from 9.8 percent over the past four months, it is primarily the result of a drop in the participation rate.