The average Lubbock consumer can tell a lot about the economy by driving around town – gas prices are up at the pump, for sale signs are popping up in the neighborhood and trucks and SUVs are flying off dealers’ lots.
“Good things are going on,” said Randy Laycock, senior vice president at Lubbock National Bank, as he released February figures from the Lubbock Economic Index. Consumer spending is on the rise and employment grew 1.9 percent, or about 2,800 jobs, in the 12 months ending in February. “These numbers show the health of our economy.”
Even gas prices, which are up 20 cents per gallon on average in Texas, are driven by strong growing economies pushing up demand for crude oil. The U.S. economy is expected to hit the Trump Administration’s 3 percent growth target.
And good economic news is not just happening in the U.S.
“World economic growth is accelerating,” Laycock said. “Growth in some smaller economies is rising.”
Economic growth of Asian giants, India and China, also put pressure on oil prices in response to stepped-up demand. “We are setting records for oil production in the U.S.,” Laycock said.
The value of West Texas oil production has risen 23.9 percent in the 12-months ending in February. Growing U.S. oil production is offsetting the effects of the agreement between OPEC, Russia and other oil-exporting countries to limit oil production through 2018.
The Lubbock economy was lifted higher by existing home sales and auto sales – both setting records in February.
Construction activity in Lubbock, which was feverishly hot in 2017, has cooled. While the inflation-adjusted value of building permits fell 27 percent compared with a year earlier, it was closer to the level of activity during the same time in 2016. January and February 2017 saw permits for some unusually large projects that created a spike in construction.
The story is similar with construction permits for new, single-family housing. The number of permits drifted down by about 19 percent compared with February a year ago. February 2017, however, was a huge spike with the number of permits issued 55 percent higher than 2016. So, the three-year trend is still upward.
The rate of inflation, as measured by the Lubbock Consumer Price Index, was 2.2 percent in February, mirroring the same rate for the U.S. Consumer Price Index. The housing component of the Lubbock CPI retreated from 3.8 percent inflation to 3.5 percent. It has experienced more upward pressure than other components possibly due to continued population growth. Housing prices have been rising more than 3 percent per year for more than five years.
Cattle and crude oil also contributed to the area’s healthy economic growth:
Lubbock National Bank Senior Vice President Chip Gilmour briefs local media each month on the report.