Economic Analysis

October 2022

Overall Lubbock numbers look good despite the inflationary pressures we are facing. Retail is up, Housing is slowing but still better than previous years and commodities are up. There are good things happening with LEDA bringing in new business to the Hub City. It is important to note that cotton yields in the area are down significantly with little to no dry land available. Even though there is an insurance safety net there will be a trickledown effect within the industry. Nevertheless, Lubbock remains resilient in spite of inflationary pressures.

Retail sales for September 2022 are up 12% when compared to September 2021 and 31% from three years ago. YTD retail sales are up 12% from last year. New vehicle sales are trending up with a 27% increase from last September and on par from September 2019. Used vehicle sales are continuing to do well with a 22% increase when compared to September 2021, and 15% from three years ago.

Hotel/Motel Collections were not available for the month of September, however when using August’s hotel/motel collections we can see a major decrease indicated by 11% drop from last year and a 45% drop from 3 years ago. Airline boarding’s are up 27% since September 2021, and up 7% from 3 years ago.

Workers employed are up 7,000 over 12 months ago on the employer survey and over 3,200 on the household survey. The labor force has increased 1.08% compared to September 2021. Wages are up 18% from last year and up 22% from three years ago.

There were 135 residential construction starts in September, down from 306 one year ago. The dollar amount of building permits issued totaled $122,725,542, up 24% compared to last year and up 128% from three years ago. YTD is $1,434,811,426, up 125% from last year. The median house price for September 2022 was $243,623 compared to $222,500 one year ago and $169,950 three years ago. The sharp increase in mortgage rates coupled with the typical fall pull back has caused a slowdown in house sales. Regardless, homes are moving albeit at a much slower pace.

Commodity prices continue to be strong, with oil up 4% since September 2021 and natural gas up 13%. The rig count has increased from 6 last year to 11 in September 2022. For September, wheat is up 31%, corn is up 33% and cotton is up 37% when compared to September 2021. Fat cattle are up 17% for the month when compared to September one year ago, and milk prices are up 28%.

October 2022	Current Month	Last Month	Last Year
Sales Tax Collections	$8,341,922	$7,759,982	$7,459,805
Sales Tax Collection-YTD	$80,946,458	$72,605,536	$72,064,451
New Vehicle Sales	993	815	782
Used Vehicle Sales	2,476	2,043	2,034
Airline Boardings	47,865	42,909	37,541
Hotel/Motel Receipt Tax	Unavailable	$768,282	$864,697
Population - Corporate Amarillo	263,648	263,648	263,648
Employment - CLF	167,816	167,263	166,015
Unemployment Rate	3.10%	3.50%	4.00%
Total Workers Employed (Household Survey)	162,576	161,465	166,015
Total Workers Employed (Employers Survey)	157,200	156,000	150,024
Average Weekly Wages	$1,021	$1,021.00	$866.00
Gas	76,271	76,152	75,349
Interest Rates: 30 Year Mortgage Rates	7.625%	7.125%	3.375%
Building Permits Dollar Amount	$122,725,542	$33,482,637	$98,783,154
Year to Date Permits	$1,434,811,426	$1,312,085,884	$622,269,823
Residential Starts	135	130	306
Year To Date Starts	1,891	1,756	2,016
Six Months Trailing	$965,001	$959,155	$463,383
Median House Sold Price	$243,623	$249,250	$222,500
Drilling Rigs In Panhandle	11	8	6
Oil Price Per Barrel	$85.59	$85.10	$82.37
Natural Gas	$6.26	$8.32	$5.52
Wheat Per Bushel	$9.05	$9.05	$7.25
Fed Cattle Per CWT	$145.00	$142.00	$124.00
Corn Per Bushel	$6.84	$6.78	$5.16
Cotton (Cents Per Pound)	$100.51	$116.41	$73.20
Milk	$21.75	$20.25	$17.00
Index*	562.94	554.23

*Base-100, January 1988

This document was prepared by Amarillo National Bank on behalf of itself for distribution in Amarillo, Texas and is provided for informational purposes only. The information, opinions, estimates and forecasts contained herein relate to specific dates and are subject to change without notice due to market and other fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be accurate, complete and/or correct. The information and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, sell or make any other investment decisions.

Commodities

Many commodities have moved lower, some by 30% from their peaks. We analyzed the price changes over the last 3 years to get a better indication of the overall market. The drop in recent prices may indicate less panic buying and improve supply chain issues.

	2019	2020	2021	Peak	Current	Since 2019
Corn	4.62	3.51	5.68	8.01	6.85	+64%
Cotton	71.70	55.00	69.70	110.00	90.70	+26%
Wheat	4.55	4.22	6.54	11.78	9.27	+103%
Fat Cattle	108.92	98.50	120.00	148.00	137.00	+27%
Dairy Milk	16.75	21.50	17.50	24.50	22.50	+34%
Oil	59.60	40.80	73.03	118.78	96.30	+67%
Natural Gas	2.32	1.74	3.66	7.95	6.83	+194%
Container Shipped from China		$5,700		$24,000	$13,700	+106%

With inflation running to 11%, according to government figures, and 15-30% in many industries, the current environment continues to be perilous. Labor shortages are making supply issues and service issues worse.

The 10-year Treasury has stopped its upward move and has settled around 3%, down from a high of 3.4%, but double the level of last year. This usually indicates the markets have confidence in the Fed’s ability to slow inflation, especially in years 4-10. The Treasury Note is often thought of as the market’s best predictor of future rate trends.

Labor Shortages

Most businesses continue to report labor shortages, hiring problems, or workers not showing up. While better than last Winter, local businesses follow the national trend of shortages affecting output, service, and business hours. Many customers point to misguided government policies coupled with the robust Texas economy as the causes. Along with continuing supply chain issues, these forces should cushion any downturn; and the problems may be ameliorated by an economic slowdown.

Supply chain issues add to the angst. Slowing business activity should help by reducing problems of both labor shortage and supply chains.