Provide chain points and COVID-19 staffing challenges stay, however state in place to journey wave of manufacturing “re-shoring” from Asia

FILE – On this Sept. 2, 2020, file picture, a buyer walks previous a now hiring signal at an eatery in Richardson, Texas. (AP Picture/LM Otero, File)
EL PASO, Texas (Border Report) – Texas in the present day has extra jobs than it did earlier than the COVID-19 pandemic, however challenges stay for the state’s economic system, say economists with the Federal Reserve Financial institution of Dallas.
Texas job development was 5.1 p.c in 2021 in comparison with the nationwide common of 4.5 p.c, in line with the Fed. Inside migration from states the place the price of dwelling and housing are larger performed an enormous function in job development, stated Pia Orrenius, vice chairman and senior economist on the Federal Reserve Financial institution of Dallas.
“Whenever you assume individuals could have locked down (throughout) the pandemic, they really picked up and moved to Texas even in larger numbers,” Orrenius stated throughout a Thursday press name on the state’s financial outlook for 2022. “What we’re seeing with the work-from-home regime is individuals can work from anyplace, you’ll be able to choose the place you wish to reside and transfer away from (the East and West) coast and into low-cost Texas.”
Austin has change into the poster baby for this relocation however the state’s largest cities – Dallas, Houston and San Antonio – in addition to smaller metros like Waco, Tyler and McAllen are experiencing much less out-migration and extra in-migration, she stated.

Tesla moved its headquarters from California to Austin in 2021; a yr earlier, 35 out-of-state firms relocated or opened new services within the Austin space the prior yr, in line with that metropolis’s chamber of commerce.
That being stated, nearly half of companies in Texas are reporting staffing shortages and COVID-19 associated absenteeism. That’s a drag on revenues as are provide chain disruptions affecting 44 p.c of companies.
Provide chain disruptions and a semi-conductor chip scarcity will proceed to pull financial development for at the very least the subsequent six and probably the subsequent 12 months, in line with the Dallas Fed.
The state’s economic system is simply anticipated to develop by 3 p.c this yr in comparison with 5 p.c in 2021. “There are some rising pains … we’re experiencing in Texas unprecedented home worth will increase; we’re not used to that,” Orrenius stated.
The Texas economic system additionally advantages from commerce with Mexico. Manufacturing vegetation in border cities like Juarez, Nuevo Laredo, Reynosa and Matamoros ship tens of millions of {dollars} within the type of assembled elements throughout the border each day. These vegetation, too, had been hit by COVID-19 man-hour disruptions, provide points and the chip scarcity, significantly within the automotive sector.
Nevertheless, Fed economists say the worldwide provide chain subject means a chance to re-shore or “near-shore” the procurement of uncooked supplies and manufacturing operations to North America.
“Even earlier than the pandemic provide chains had been very susceptible to commerce (tensions) and geopolitical isues. […] It may be good for North America that provide chains now in Asia could now be with Mexico and Canada, as an illustration. How briskly that occurs and the way pervasive we’re undecided,” Orrenius stated.
She added that a number of know-how corporations are “beginning to construct their very own vegetation” to fabricate elements within the U.S. as they don’t need provide points to change into a recurrent drawback. “Taiwan has 40 p.c of the worldwide pc chip provide. Reshoring or near-shoring, the constructing of home manufacturing makes numerous sense,” Orrenius stated.

Cross-border commerce with Mexico additionally faces challenges. Mexico’s manufacturing sector principally has returned to pre-pandemic ranges, however that nation’s gross home product has not; it confirmed destructive development in the course of the 4th quarter of 2021.
“We’ve seen numerous destructive development previously few years. Lack of funding is one thing that’s going to harm (Mexico’s) economic system in the long run,” Orrenius stated, although she expressed confidence that the latest reopening of the border to non-essential land journey “will assist some.”