Texas had the fastest-growing economy among U.S. states in the second quarter of this year, according to data released by the Bureau of Economic Analysis.
The state’s gross domestic product — the value of all goods and services produced over a period of time — grew by 4.7 percent in the quarter. That’s well above the national growth rate of 2 percent over the same time.
Alaska, New Mexico and Wyoming were the only other states with at least 4 percent GDP growth.
“The reality is that we in Texas are living in a parallel universe,” said Nathaniel Karp, BBVA’s chief U.S. economist. “We’re talking about 4 percent real GDP growth rates in an environment where all developed economies pretty much have stagnated. There’s been very meager growth.”
The mining sector, which includes oil and gas extraction, had the largest growth among industries in Texas in the quarter. Oil and gas production has risen sharply since the 2015 oil bust, powering Texas’ recent economic growth.
But as the energy industry has bounced back, manufacturing and professional services have experienced steady growth this decade and have reached record-high levels for Texas.
Over the last year, production from Texas’ professional services sector, which includes skilled services ranging from photography to legal advice, grew by 8.7 percent.
Nationally, professional services grew by 6 percent over the last year.
Statewide manufacturing output, meanwhile, remains around the record level set in the fourth quarter of 2018.
Total U.S. economic gains in the second quarter were centered among Southwestern states. The states with the slowest growth were broadly located in the Midwest. States such as Illinois, Indiana, Wisconsin and Michigan experienced GDP growth at or below 1.1 percent.
“We have benefited from globalization like many other states have not. We do not have some of the challenges that some other states have been facing,” Karp said of Texas.
Overall, Texas remains an outlier economically, something economists attribute to the state’s pro-business political environment.
Karp said a recession is likely in the near future, but Texas’ economic diversification in recent decades, primarily in technology and health care, is likely to insulate the state from the effects of a future downturn.
And while excessive growth can present its own problems, Karp said the Texas economy is currently humming along as well as any large economy in the world.
“(Growth) comes with challenges, too. Austin is a reflection of the challenges, both with traffic congestion, home prices and so on. If you grow too fast, you suffer some of the negative consequences,” Karp said.
“But overall, (economic growth) is allowing millions of Texans to improve in terms of quality of life, incomes, educations, children and health care.”
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