Texas Gov. Rick Perry’s shadow run for the White House rests on expansive claims that the Lone Star State’s economy has done better than the rest of the country through the Great Recession. “We keep adding jobs while others are losing them left and right,” he told the Republican Leadership Conference at its mid-June meeting in New Orleans.
The Republican governor ‘s economic stewardship has received enthusiastic reviews from the media, including the Wall Street Journal, which claimed in an editorial that Texas accounted for 37 percent of all the new jobs created since the recession ended two years ago. Conservative pundit George Will championed Perry’s success in mixing low taxes, small government and balanced budgets to create jobs – what he called Texas “exceptionalism” – and said his economic acumen could carry Perry to victory in next year’s Republican primaries, should he decide to enter the race.
There’s just one problem with that portrayal. While Texas has created more jobs than any other state in the past two years, the increase is far less than advertised, and the rate is not much higher than a number of other states, including former rustbelt centers like Pennsylvania or liberal sanctuaries like Vermont. In fact, the Lone Star State’s unemployment rate of 8 percent is ranked 24th among states, placing it squarely in the middle of the pack.
Moreover, to the extent Texas has done better than other areas of the country, most of its good fortune rests on conditions that are not replicable elsewhere: soaring oil prices have provided a substantial number of new jobs and tax revenue even as higher gas prices put pressure on other state budgets, and an influx of new government defense spending has pumped up revenue. Moreover, the state has used oil revenue to postpone a sharp cutback in state and local government employment, which is about to hit in full force.
In addition, Texas eluded the housing price bubble and thus did not suffer as much from price declines and foreclosures. After the savings and loan crisis of the early 1990s, which hit Texas hard, the state legislature tightened mortgage regulations. Even though Perry touts a free market economy, the new mortgage rules saved Texas from the worst effects of the national housing bust, even as construction employment fell by 95,000 and remains 14% below its pre-recession peak.
“Anyone who thinks the relatively strong performance in Texas has much to do with state government policy is wrong, except when it comes to housing, where regulation helped the state,” said Howard Wial, an economist and fellow at the Brookings Institution’s Metropolitan Policy Program. “In Texas, the worst is yet to come.”
After assuming the seat held by George W. Bush in 2000, Perry, 61, has been elected to three full terms as Texas Governor, making him the longest serving chief executive in state history. Married with two grown children, he has won plaudits from social and economic conservatives alike for his strong anti-abortion, anti-tax and anti-regulation stands. He also takes pride in his willingness to lure businesses from other states by offering special tax breaks. Asked by a television interviewer why some companies had relocated to Texas from California, he replied: “They like the smell of freedom – freedom from taxation.”
The recession officially ended in June 2009, but job declines continued across the country for most of the next six months, including in Texas. But after oil prices soared to nearly $150 a barrel in 2008 and remained high for most of the past two years, the Texas oil patch and the global oil services industry centered in Houston staged a strong recovery.
The state added 45,000 natural resource extraction jobs since the jobs trough of the recession. That was 15 percent of all the new jobs added in the state. The oil price bubble has also created tens of thousands of new business service jobs, which are counted separately.