Recession in Texas? Experts Weigh the Odds…and What Happens Next

On the heels of last week’s announcement that inflation rose yet again last month, economic experts are becoming increasingly worried that the U.S. – and the state of Texas – are about to enter a period of recession. Many agree that a recession, formally defined as two consecutive quarters of negative growth, could occur in the next month or next year. The U.S. Q1 growth was down 1.4%, but the final analysis on Q2 won’t be revealed by the Bureau of Economic Analysis until the end of July.

How might a recession affect Texas? And what can we expect, if and when it does become a reality? Here are some thoughts and insights that FranNet of DFW & Oklahoma discovered while doing research on these questions.

Balancing News, Both Good and Bad

Consumers in North Texas and Oklahoma don’t need a reminder that inflation has become their biggest pain point. With the price of goods and services up across the board – especially at the grocery store and the gas pump, family budgets have been squeezed tight. The stock market and the S&P 500 have suffered setbacks that put the financial markets in correction territory, lessening the value of savings and retirement accounts. But that’s the bad news. Believe it or not, there is also good news to consider. Unemployment is at its lowest rate in 50 years, and consumer spending remains robust. Wherever you derive your economic prognostications, there are actually arguments to be made on both sides of the equation.

What About Texas?

Texas has always been at the forefront of America’s economic engine, but it’s become even more so since the pandemic. The state has recorded seven consecutive months of employment highs and the Lone Star State is still among the top destinations for new arrivals and population growth – of both the individual and corporate kinds. The latter has placed enormous pressure on a strained housing market, driving home prices through the roof and creating additional wealth for households. Because of Texas’ favorable business climate (hello, Entrepreneurs!) and nonexistent state income tax, the banking and financial sector believes that the state wouldn’t suffer as much as others during a recession and would also be among the first to recover.

Evidence of Economic Resiliency

The North Texas region in particular is experiencing record amounts of consumer spending, which in turn is driving up sales tax revenue at a furious pace. Revenues reached $3.7 billion in June 2022, helping to amass a 20% gain statewide over the past 10 months. These have helped buoy the state’s coffers, and the comptroller has several North Texas communities to thank for this surplus. Seven of the top-10 municipalities with the biggest sales tax gains are located right here in the Metroplex – including Frisco, Grand Prairie, Irving, Arlington, Plano, Fort Worth, and Dallas.

Entrepreneurs today should keep a close eye on the economic health of the country, as well as our region – which just so happens to be thriving. However, as we’ve seen in past recessions, the economic climate can change rapidly. But if you’re looking to own a business of your own in our region – all signs continue to point to a strong consumer spending environment, which is precisely what’s needed to support new business endeavors.

We invite you to share your thoughts with us, especially if you’re currently considering business ownership through franchising. You can get some great advice from FranNet of DFW & Oklahoma with our no-cost, no-obligation sessions. We have helped hundreds of entrepreneurs become their own boss and secure a financial future that belongs solely to them. And we can help you do the same. Give us an opportunity to help, and we’ll introduce you to a whole new world of possibilities through franchise ownership. Getting started with your personal entrepreneurial assessment is easy – just ask us how!

Jul 18, 2022