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For immediate release: February 7, 2006

Revamped Southwest Economy Examines Texas Economy, U.S. Mexico Economic Ties and the Changing Fed Leadership

DALLAS—The Federal Reserve Bank of Dallas today launched its revamped Southwest Economy, which will sharpen its focus on the regional economic perspective. The latest issue features the Texas economy, the U.S.–Mexico economic partnership and an interview with Dallas Fed research director Harvey Rosenblum.

Dallas Fed President and CEO Richard W. Fisher writes in an introductory letter that the Southwest Economy’s stronger regional focus supports the Bank’s priority of understanding how globalization is affecting the economy.

“We believe Texas and the Southwest—places quite familiar with open borders —can teach the rest of the nation a lot about how to reap the benefits of globalization,” he states.

In “Texas Economy Shifts into Higher Gear,” economist Fiona Sigalla writes that the Texas economy will grow at a slightly faster pace in 2006.

Texas outpaced the national economy in 2005, spurred by a thriving energy industry, a surge in residential construction and an increase in manufacturing.

“While partly the result of a rebound from hurricane disruptions, the rise in Texas’ leading indicators appears to be signaling a sustainable pickup in economic activity,” Sigalla writes.

In 2005, Texas also posted its most robust job growth since 2000. The Dallas Fed projects Texas job growth will reach approximately 2.8 percent in 2006.

In a related spotlight article, Sigalla examines the role of Texas and California as top exporting states. Texas and California produce more than a quarter of the nation's exports, and Texas surpassed California as the top exporter in 2002. Sigalla states that Mexico's maquiladoras have been crucial to Texas' surge in exports.

In “The Fed’s Changing of the Guard,” director of research Harvey Rosenblum says Ben Bernanke’s term as Fed chairman is likely to be just as impressive as his predecessor’s because of his experience, reputation and leadership skills.

Rosenblum points out that Bernanke has hurdles to overcome that weren’t present when Alan Greenspan took over the reins, including the impact of higher short-term interest rates and the potential for an inverted yield curve—often a precursor to recession.

“There is no honeymoon—not in a financial system like ours, not in this country where people are free to take risks and reap the consequences,” Rosenblum states.

In “U.S., Mexico Deepen Economic Ties,” assistant economists Jesus Cañas and Roberto Coronado, and vice president Robert W. Gilmer review presentations from a Dallas Fed conference, “The U.S. and Mexico: Are We Still Connected?” They conclude that the economies of the two countries are becoming increasingly interdependent.

Speakers at the conference included Daniel Chiquiar of Banco de México and Gerardo Esquivel of Colegio de México.

Chiquiar demonstrated that wage inequality in Mexico declined in regions with significant ties to trade. Esquivel said that remittances from Mexican expatriates living in the United States are now a major source of income for Mexican villages.

The new Southwest Economy includes several new features, including a Q&A on economic topics, a Spotlight on key issues, and a Noteworthy page.

The January/February Southwest Economy can be found at


Media contact:
James Hoard
Phone: (214) 922-5307