The Lubbock economy’s run of general growth and expansion reached an impressive six years in August since the recession/post-recession low point of August 2011.
Continued strong construction numbers, a healthy growth in auto sales, steady employment growth and declining jobless numbers kept the Lubbock National Bank Economic Index at a record high in August.
The Index stayed at 151.3, the same as July, but 3.4 percent ahead of August last year, when the Index was 146.4.
Chip Gilmour, Lubbock National Bank senior vice president, briefed local media on the August report and was joined by Robert Lacy, president of Lubbock-based PYCO Industries, the largest cottonseed cooperative serving the southern United States with more than 50 member gins.
Lacy talked about the pending cotton crop and more.
Here’s what they discussed:
Cotton prices in August were 67.42 cents a pound, basically flat over last August and still below the Index’s 1996 base year price of a bit more than 72 cents.
“This cotton crop had the potential to be great, now it’s going to be good,” said Lacy, explaining yield will be a little lower due to rain and cool temperatures.
“The harvest needs hot, dry weather. You never say too wet in West Texas, but it’s been too wet to get into the field. I think we’ll have a good harvest. This has been the first real dry week so they’re starting late. We’ll see cotton ginning into March or April in some places,” said Lacy.
He also talked about two things that could boost cotton farming.
China, which was hoarding cotton, which in turn helped drive down prices, is starting to buy cotton from the U.S. and other countries.
“They are increasing imports and need good, quality cotton because I’m not sure how good the quality of their cotton is,” he said.
Also, getting cotton as a Title 1 commodity in the Farm Bill would offer farmers more protection beyond insurance if there’s a disaster or prices crash, he said.
Retail sales were down 0.1 percent in August compared to a year ago, but up 1.3 percent year to date.
Auto purchases were up 4 percent for August over August last year and up 4.2 percent year to date.
“The stock market is at all-time high levels and that bodes well for economy,” said Gilmour. “People’s retirement accounts have increased significantly and predictions are healthy for next year. It’s a good time to invest money.”
Gilmour pointed out the 4ore Golf complex in West Lubbock as an example of major investment that will drive spending.
Lacy talked about how much money farmers put into the local economy.
“Even when farmers are struggling, agriculture and cotton are still a billion-dollar industry for cars, food, retail and everything. They are still a big driver,” he said.
Even though farmers spend a lot of money, they’re doing it on tighter margins, Lacy said.
“Prices for the stuff they use (supplies, equipment, etc.) have increased, but cotton prices have not increased.”
Hotel/motel spending was down 5.5 percent August over August, which sparked a discussion if those numbers would change after football season and the impact of 11 a.m. kickoffs.
Those 11 a.m. games may not help hotels – as more hotels are being built – but does help restaurants and retail, said Randy Laycock, LNB senior vice president.
“It leaves time for people to go to restaurants and shop after the game. After a late game they may just go home,” he said.
Wage and salary employment increased 1.7 percent August over August and the unemployment rate stayed at 3.6 percent over July and down from 3.7 percent in August of last year.
New home permits were up, but home sales, average home sale price and dollar volume of residential real estate sales were down.
“Those real estate numbers are compared to last year’s tremendously high activity. Last year was significantly higher than last the four years,” said Gilmour, adding construction is still strong and he expects it to stay a huge driver of the local economy.
Lubbock’s Consumer Price Index stayed at a 2.4 percent increase.
“It’s still a little high,” said Gilmour, repeating what he’s said in the past about healthcare costs still being a “wild card for now as premiums continue to go up.”
Lubbock National Bank Senior Vice President Chip Gilmour briefs local media each month on the report.