Business startups decline in Texas
January 26, 2009
These figures reinforce other recent reports indicating Texas' economy is flagging. On Friday, the Texas Workforce Commission said that Texas employers cut 25,700 jobs last month and that the unemployment rate rose to 6 percent from 5.7 percent in November. Earlier, the Federal Reserve released a report filled with anecdotes about the weakening state economy.
Written by Katie Fairbank, The Dallas Morning News
In another indication that Texas' economy is slowing, the number of new businesses starting up dropped last year.
Applications to create partnerships and incorporate businesses fell last year to 115,885 from 124,202 in 2007, according to filings with the Texas secretary of state.
The state comptroller's office also saw a slump in the number of filings to create a business or move one to a new location.
New sales tax permits fell about 6 percent across the state in 2008, from 157,013 to 147,643. In Dallas, the decline was also roughly 6 percent, from 8,465 to 7,963.
These figures reinforce other recent reports indicating Texas' economy is flagging. On Friday, the Texas Workforce Commission said that Texas employers cut 25,700 jobs last month and that the unemployment rate rose to 6 percent from 5.7 percent in November. Earlier, the Federal Reserve released a report filled with anecdotes about the weakening state economy. And Texas Comptroller Susan Combs said she expects the state to lose more than 110,000 nonfarm jobs in the first nine months of the year.
"We have seen a lot of signals that the Texas economy is slowing, so it would not be surprising to see these numbers down a bit," said economist Ray Perryman of the Perryman Group in Waco. "I do not think these numbers signal any type of fundamental trend but rather a reflection of the slowing national and global economies and the spillover effects on Texas."
Texas is considered an entrepreneurial state, so the fact that fewer new companies, partnerships and corporations were formed is a strong indicator that the state's economy is struggling. But economists say that's not unexpected.
"A lower pace of business formation is not surprising considering the difficulty of accessing capital, the general economy and the drying up of venture capital," said Bernard Weinstein, a University of North Texas economist. "Business lending, particularly for small new startup businesses, is very hard to come by."
Texas was shielded from the recession for a while because of its business diversity. And it was buffered by industries such as energy and high-tech.
Those days seem to be over.
"We typically follow with a lag, and now we're being dragged into the national recession. There's no place to hide," said Weinstein. "The industries that were insulating us from the worst of this economic crisis are now starting to falter themselves, like energy."
Related Stories
Fair Use Notice
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a "fair use" of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond "fair use", you must obtain permission from the copyright owner.