Rick Perry has charged to the head of the GOP pack largely on the strength of jobs record during twelve years as governor of Texas – especially following the 2008 recession while the rest of the country has struggled to stir up growth. A piece in the WSJ, however, predicts that Texas and other states that have done well recently are in for trouble:
In recent years, booming growth in China and other emerging economies has driven up demand for coal, oil and agricultural products, as well as for the technology and machinery needed for their rapid industrialization. That has been bad news for many U.S. consumers and businesses facing higher food and energy prices.
But strong global growth has been good for states that pump oil, grow grains or manufacture equipment sold overseas. North Dakota led the nation in economic growth last year and has the country’s lowest unemployment rate, due largely to an oil boom in the western part of the state. Relatively strong growth in states like Indiana and Oregon has been spurred by their large manufacturing sectors. And Texas, which has led all states in job creation since the end of the recession, has benefited from both energy and manufacturing as well as strong exports.
In recent months, however, Chinese authorities have taken steps to slow the country’s breakneck growth to keep their economy from overheating. At the same time, the slow pace of economic recovery in the U.S. and Europe is threatening to drag down developing economies as well—which could ultimately hit the U.S. states that have been helped by overseas growth.
“Now that the global economy is slowing, we’re kind of pulling the rug out from under the few areas that were doing relatively well,” said Mark Vitner, an economist with Wells Fargo.
If Texas (and other energy-driven states) take a big hit, will Governor Perry still be able to run on jobs a year from now? Perry’s critics on the left have sniffed at the Texas economic dynamo as built on low-paying jobs in the unfashionable non-green energy sector, but their arguments have gained little traction so far. The numbers don’t lie: growth is up and disaffected workers from more stagnant states have been moving to Texas “in droves.” But if growth sputters as global demand slows, the jobs dynamo will run out of steam as well.