Texas’ economic outlook bright, nation’s forecast less so, Dallas Fed chief says

Federal Reserve Bank of Dallas President and CEO Robert Kaplan says Texas will be fine. It’s the rest of the country he’s worried about.

With a growing and younger population, Texas is bucking the national trend, and the state’s economy will continue to outpace the nation’s because of it, Kaplan said in a session in Dallas on economic trends and workforce needs.

Dallas Fed, Robert Kaplan

Kaplan said he is optimistic on the outlook for Dallas County and Texas because of favorable migration trends, diversification which has decreased the state’s reliance on the energy sector, and the state’s central location, among other factors.

But the Fed estimates the national rate of growth for the all-important gross domestic product to be an uninspiring 2 percent in the year ahead, he said in remarks before an audience of Dallas County Community College District employees.

U.S. households are carrying more debt than in recent years, which likely means consumer spending will be down, Kaplan said. The country’s aging demographics and slower population growth also put a damper on GDP, he said.

“The big issue facing the United States is slowing population growth and aging population,” Kaplan said. “Why is that relevant to economic prosperity? Gross domestic product is made up of growth of the workforce and secondly, their productivity. We have a problem in the U.S. in that we’re getting older, and because of that, workforce growth is slowing.”

The skills gap — a shortage of workers who have the skills employers need — is constricting GDP, he said.

Narrowing the skills gap is an important role for institutions such as the Dallas County Community College District, Kaplan said. The need for skilled jobs is ever-accelerating because of technology, and educational institutions are are not keeping up, he said.

Kaplan called DCCCD a “shining example.”

’What you’re doing is working with local businesses to understand their needs, then working with them to create education programs that fill those needs,” he said. “This has got to be a partnership between the private sector and businesses and educational institutions.”

In an interview with the Dallas Business Journal after Kaplan spoke, DCCCD Chancellor Joe May said the district constantly works to match its programs to employers’ needs, and starts new programs accordingly. This year, DCCCD started a new dental hygiene program working with surgical centers in Dallas County, he said.

“We’re making sure we are aligning our programs with what’s happening here in our community, which means getting jobs,” May said. “If they (students) are not getting jobs, then we’re not focusing on the right areas.”

Kaplan also said the nation’s historic openness to immigrants has given the U.S. an economic edge against other countries, and maintaining that edge is crucial.

“Culturally, we are receptive historically to immigrants — that’s one of the things that differentiates us from Japan and China,” Kaplan said. “Let’s make sure we’re very careful about undermining those things that made us great.”

His comments come at a time when President Donald Trump has called for limiting immigration as a way to protect U.S. workers’ jobs.

Kaplan also weighed in on the “gig economy,” referring to freelancers and contract workers who work multiple jobs to piece together a decent income stream, often without health care or other benefits.

The stress of working multiple jobs takes a toll on family life and often on the ability to pay bills, buy a home or meet other life goals, he said.

“It sounds great, it sounds glamorous, it sounds like fun,” Kaplan told the room full of educators. “Until you’re the one doing it.”

By: Bill Hethcock, Staff Writer, Dallas Business Journal, Aug 18, 2017. A link to the original article is here.