Economic Analysis

July 2022

Overall, the Lubbock Economy continues to remain healthy coming out of the pandemic. However, we are beginning to see cooling off signals that we will continue to watch. Inflationary pressures along with continued supply chain delays have contributed to stress in some sectors of our economy. Regardless, the region benefits from a highly skilled and educated workforce, proximity and connection to major national and international markets, and affordable utility and living costs that help drive the local economy.

Retail sales for June 2022 are up 0.33% when compared to June 2021 and 29% from three years ago. YTD retail sales are up 14% from last year. New vehicle sales are down 41% from last June due to supply shortages, and down 18% from June 2019. Used vehicle sales are down 17% compared to June 2021, and up 0.41% from three years ago.

Tourism is recovering, with strength in the motel tax collections, which is up 22% compared to June 2021 and up 46% compared to three years ago. Airline boarding’s are continuing to recover, indicated by the 16% increase since June 2021; however, they are still down 5% when compared to 2019.

Workers employed are up 5,000 over 12 months ago on both the household and employer survey. The labor force has increased 2% compared to June 2021 and 3% from three years ago. Wages are down 5% from last year and up 5% from three years ago.

Construction took a major hit in June with the dollar amount of building permits issued down 66% compared to last year and 29% from three years ago. YTD is $917,379,946, up 108% from last year. There were only 85 residential construction starts for June 2022, down 64% compared to one year ago and 13% from three years ago. The median house price for June 2022 $249,975 compared to $222,500 one year ago and $185,000 three years ago.

Commodities all show higher prices from last year, with oil up 32% since June 2021 and natural gas up 71%. The rig count has stayed the same since last year at 7. For June 2022, wheat is up 42%, corn is up 21% and cotton is up 82% when compared to June 2021. Fat cattle are up 14% for the month when compared to June one year ago. Milk prices are up 29% from last June; higher input costs have cut profitability for dairy producers.

July 2022	Current Month	Last Month	Last Year
Sales Tax Collections	$7,603,664	$7,578,644	$6,805,456
Sales Tax Collection-YTD	$55,660,144	$48,056,480	$8,906,540
New Vehicle Sales	697	866	1,172
Used Vehicle Sales	1,942	2,283	2,352
Airline Boardings	45,038	45,058	38,899
Hotel/Motel Receipt Tax	$862,189	$923,049	$706,855
Population - Corporate Amarillo	263,648	263,648	252,506
Employment - CLF	168,281	167,727	164,952
Unemployment Rate	3.80%	3.00%	5.40%
Total Workers Employed (Household Survey)	161,830	162,623	156,029
Total Workers Employed (Employers Survey)	155,900	155,800	147,995
Average Weekly Wages	$928.00	$928.00	$981.00
Gas	76,584	76,667	75,777
Interest Rates: 30 Year Mortgage Rates	6.125%	6.125%	3.000%
Building Permits Dollar Amount	$33,457,586	$340,614,598	$99,708,652
Year to Date Permits	$917,379,946	$883,922,360	$440,710,923
Residential Starts	85	507	235
Year To Date Starts	1,491	1,406	1,252
Six Months Trailing	$959,155	$1,005,830	$463,383
Median House Sold Price	$249,975	$248,000	$222,500
Drilling Rigs In Panhandle	7	8	7
Oil Price Per Barrel	$96.30	$118.78	$73.03
Natural Gas	$6.83	$7.50	$3.66
Wheat Per Bushel	$9.27	$10.50	$6.54
Fed Cattle Per CWT	$137.00	$134.00	$120.00
Corn Per Bushel	$6.85	$7.68	$5.68
Cotton (Cents Per Pound)	$127.09	$140.06	$69.70
Milk	$22.50	$24.50	$17.50
Index*	575.07	316.75

*Base-100, January 1988

This document was prepared by Amarillo National Bank on behalf of itself for distribution in Amarillo, Texas and is provided for informational purposes only. The information, opinions, estimates and forecasts contained herein relate to specific dates and are subject to change without notice due to market and other fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be accurate, complete and/or correct. The information and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, sell or make any other investment decisions.

Commodities

Many commodities have moved lower, some by 30% from their peaks. We analyzed the price changes over the last 3 years to get a better indication of the overall market. The drop in recent prices may indicate less panic buying and improve supply chain issues.

	2019	2020	2021	Peak	Current	Since 2019
Corn	4.62	3.51	5.68	8.01	6.85	+64%
Cotton	71.70	55.00	69.70	110.00	90.70	+26%
Wheat	4.55	4.22	6.54	11.78	9.27	+103%
Fat Cattle	108.92	98.50	120.00	148.00	137.00	+27%
Dairy Milk	16.75	21.50	17.50	24.50	22.50	+34%
Oil	59.60	40.80	73.03	118.78	96.30	+67%
Natural Gas	2.32	1.74	3.66	7.95	6.83	+194%
Container Shipped from China		$5,700		$24,000	$13,700	+106%

With inflation running to 11%, according to government figures, and 15-30% in many industries, the current environment continues to be perilous. Labor shortages are making supply issues and service issues worse.

The 10-year Treasury has stopped its upward move and has settled around 3%, down from a high of 3.4%, but double the level of last year. This usually indicates the markets have confidence in the Fed’s ability to slow inflation, especially in years 4-10. The Treasury Note is often thought of as the market’s best predictor of future rate trends.

Labor Shortages

Most businesses continue to report labor shortages, hiring problems, or workers not showing up. While better than last Winter, local businesses follow the national trend of shortages affecting output, service, and business hours. Many customers point to misguided government policies coupled with the robust Texas economy as the causes. Along with continuing supply chain issues, these forces should cushion any downturn; and the problems may be ameliorated by an economic slowdown.

Supply chain issues add to the angst. Slowing business activity should help by reducing problems of both labor shortage and supply chains.