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Dallas Fed: Texas Employment Growth Likely to be Between 2 and 3 Percent in 2013

For immediate release: March 26, 2013

DALLAS—The latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy includes articles on the outlook for the Texas economy in 2013, niche banking in Mexico and the potential economic impact of immigration reform.

Find the first quarter 2013 issue at:

Texas is likely to see faster economic growth than most U.S. states again in 2013, with employment growth of between 2 and 3 percent, according to senior research economist and advisor Keith Phillips in “Texas Likely to Continue to Lead Nation’s Recovery.”

The pace of Texas’ growth in 2013 will slow somewhat compared to 2012 as manufacturing activity reflects weak international demand and the pace of energy extraction moderates, Phillips notes.

Still, some of the weakness in exports and energy should be offset by acceleration in statewide construction activity, Phillips states. Residential construction indicators suggest growth is likely to stay strong in 2013, and office construction also is likely to increase this year in response to a decline in office vacancy rates.

State and local government employment growth will likely be stable this year, according to Phillips.

In “Mexico Develops Niche Approach to Expansion of Banking Services,” business economist Edward C. Skelton finds that new types of banks being chartered in Mexico—known as niche banks—can help address the issue of low banking penetration in the country by bringing more households and business into the formal banking system.

About 44 percent of Mexicans were outside the formal financial system in 2012, and only 35 percent of Mexican businesses with fewer than 100 employees had outstanding bank credit at the beginning of 2013, Skelton notes.

“By focusing on a specific market or region, niche banks may be better equipped to reach small businesses and help them serve as an engine for the country’s overall growth and development,” Skelton writes.

Potential pitfalls to the niche bank model include greater regulatory burdens and difficulty obtaining funding or recapitalizing during tough times, Skelton finds.

According to this issue’s “Spotlight” article, the main economic effect of a comprehensive immigration law revamp including a legalization plan would be higher earnings for those who become legal.

Some benefits usually associated with unauthorized workers, including lower prices for goods and services, would dissipate with a legalization program, the article notes.

“The immigrant wage increase that would occur after an amnesty is effectively a transfer to the newly legalized workers from employers and consumers,” the article states.

On the tax side, income and payroll tax revenues would be expected to increase as some workers paid under the table move onto the books, the article says.

This issue of Southwest Economy also features an “On the Record” conversation with University of Texas–Pan American professor Marie T. Mora on education and wage gaps in the Hispanic workforce.


Media contact:
Alexander Johnson
Phone: (214) 922-5288