Lubbock’s healthy economy kept steaming along in December and here are Chip Gilmour’s six takeaways from Lubbock National Bank’s December Lubbock Economic Index.
More than five years of healthy, steady growth in many sectors. Overall, another record number for the Index – 149.3 – up from 148.9 in November and from 145.2 for December of 2015. “Wall Street is predicting a fairly stable year,” said Gilmour.
Oil prices were $48.69 a barrel in December, up 44.2 percent from a year ago with predictions to go up around $55-60 a barrel, said Gilmour. This will flow through the West Texas economy in many positive ways, he said.
Cotton continues to climb out of its prolonged slump – inching up to 68.87 cents a pound in December, just a bit higher than the previous month – but up 15 percent from a year ago. Like oil, increased cotton prices also benefit the West Texas economy.
New home permits were up a massive 116 percent from December a year ago and the average home sales price was up 8.8 percent over December of 2015, a very strong return for home owners. When asked why construction and value continues to rise, Gilmour said: “We went through little bit of lull in 2008 to 2010. Then people saw mortgage rates were well under control in the 3-to-4 percent range which makes it attractive to buy a home. And from a tax point of view it’s a great investment.” Gilmour added he’s impressed at all the apartment complexes being built in Lubbock and filling up – another example of construction growth, crediting it to Texas Tech’s growing enrollment.
The Lubbock Consumer Price Index crept up two-tenths of a percent to 1.8 percent. “Inflation percolated upwards a little bit,” said Gilmour, “but around the 2 percent range is still healthy and what we expect.” He added Janet Yellen, Federal Reserve chair, has indicated interest rates may be bumped twice this year and if that happens, Gilmour expects those bumps to both be a quarter of a percent.
Retail sales continued lower than the previous year – 2.9 percent under December of 2015. As he’s said before, Gilmour said healthcare costs are affecting how much money people have to spend on other things. “It’ll be very interesting to see where we are in healthcare. I don’t know how President Trump is going to control the cost of healthcare and how it will affect your pocketbook. It’s very complex.”
Add in that oil and gas prices were so soft the first eight months of last year it affected spending and people adjusted their spending habits, he said. And even though rising oil prices overall are important for the region, rising gas prices could dampen spending for some people.
Lubbock National Bank Senior Vice President Chip Gilmour briefs local media each month on the report. To see the full report, click here To see the Lubbock Avalanche-Journal story, click here