Across much of the great Southwest, the nationwide recession has meant little more than a slowdown in an era of breakneck growth.
Blessed with an abundance of the commodities prized by business--energy, land, transportation facilities, good weather, low-cost labor, lenient tax policies--the Southwest emerged from 1981 healthier than most other parts of the nation, and it shows every sign of surging again later in 1982.
The region already has lower rates of unemployment and higher rates of personal income growth than most of the rest of the nation, and economists agree that a pent-up demand for housing for a rapidly growing population will provoke a new boom if interest rates continue to drop.
Texans like to say that their state "chose not to participate" in the recession, but more than bravado underlies the region's economic resilience.
Oil and gas drilling in Texas and Oklahoma have reached land-rush proportions. Canadian and Mexican investors are providing real estate development capital. Huge military installations in Oklahoma, Texas, New Mexico and Arizona partially insulate the region from federal spending reductions. The region's factories are generally newer and more efficient than those in the North, better equipped to surive an economic shakeout. Steady population growth, largely because of migration from the North, is driving up the value of commercial and residential real estate and sustaining demand for local public works projects.
Yet the Southwest is not recession-proof, only better equipped to resist hard times. "The recession is here," said Edward L. McClelland, research economist at the Federal Reserve Bank. "All the weak indicators of the national economy are here. It's just that this region has special strengths that overpower its weaknesses."
Those weaknesses are in agriculture, housing, mining and, inevitably, the automobile industry. In Arizona, thousands of copper miners have been laid off as the bottom dropped out of the copper market. In Texas, prices for cattle, feed grains, corn and cotton have all dropped more than 10 percent over the past year.
The prolonged nationwide housing slump has hit the Southwest hard because fast-growing cities such as Phoenix, Albuquerque and San Antonio have a high percentage of their labor force in construction. Oklahoma has the nation's lowest overall unemployment rate, about 3.5 percent, and the demand for labor is so strong that "anybody who wants to work can get a job if he is physically fit," according to Neil J. Dikeman, associate director of the Center for Economic and Management Research at the University of Oklahoma. But in the southeastern part of the state, where the lumber industry has been hit by the housing slump, some counties have unemployment rates of 10 percent.
The diversity of the Southwest's economy means that no one industry can throw the entire region into a slump. In Oklahoma, for example, a shutdown of the General Motors plant in Oklahoma City has been offset by a roaring boom in oil and gas exploration on the windswept plains to the west, where twice as many rigs are working as a year ago and weatherbeaten farmers are suddenly striking it rich through the sale of mineral rights.
In Texas, the unemployment rate in the agricultural communities of the Rio Grande Valley is near 15 percent, but it is less than 4 percent in Odessa, the center of the oil industry. Fort Worth's second-largest employer, the Bell Helicopter division of Textron, has pared its work force from 9,000 to 7,900, but at the same time commercial construction in the city is at its highest rate ever.
Because of the spectacular growth of such communities as Tucson and San Antonio, the highly visible wealth in Houston, Tulsa and the Phoenix area, and the proliferation of new factories, airports and universities, the entire Southwest gives off a somewhat misleading aura of prosperity. Per capita personal income is growing throughout the region, yet only in Texas does it reach the national average, and there appears to be a vast gulf between those who are cashing in on the region's prosperity and those who are not.
Arizona Gov. Bruce Babbitt said the state's Navajo Indians had been "hit hard by cuts" in federal programs and "devastated" by the termination of CETA job training. In Oklahoma, said Dikeman, "there are Hispanics and some Indians in the southeast counties who make you want to cry."
In San Antonio, where downtown real estate prices are skyrocketing in a development boom, civic activist Beatrice Cortez said the city's poor "are finding it harder and harder to make out and they have nowhere to go for help. The federal programs just aren't there any more." Touring the shantytowns of the city's southwest side, she pointed out houses that have been upgraded with federal funds and said, "the ones whose homes have not been fixed can't understand why there is nothing left for them."
Even among rank and file workers, there are great disparities. The average weekly manufacturing wage in Beaumont and Port Arthur, Tex., for example, is $468, but in El Paso it is only $214.50.
Economists such as Dr. James Byrd of Dallas' First International Bancshares and Elliott Pollack of Arizona's Valley National Bank agree that the crisis in the housing industry is a temporary phenomenon that should end later this year as interest rates drop below 13 percent. When that happens, they said, it will restore health to the real estate industry and to the appliance, lumber, carpet and furniture suppliers who have been hit by the housing slump.
But opinion is divided on the prospects for other key segments of the regional economy. Pollack said Valley National Bank, Arizona's largest, "expects a real strong second half of 1982" as personal income taxes are cut, interest rates drop and defense procurement increases. "The Sun Belt," he said, "will continue to do better than the nation as a whole--people like to live here."
Byrd, however, noted that as the Southwest has built up the manufacturing segment of its economy, it has become more vulnerable to nationwide industrial slumps, especially in the auto industry. "We're not as immune as we have been in the past," he said. "There is no built-in rebound factor in the auto industry," as there is in housing, he said, so that manufacturers of auto parts, glass and other supplies could not assume better times lie ahead.
Arizona state officials said that their state's boom growth of the past decade is going to be difficult to sustain because the influx of high-technology and electronic industries is leveling off and the state's limited water supplies have forced it to impose restrictions on development.
In Texas, economists and bankers said they expect a continuation of the growth of Houston, the Dallas-Fort Worth area, San Antonio, Austin and Corpus Christi in 1982, no matter what happens to the national economy, but they could not predict a quick turnaround in areas dependent on agriculture.
In Oklahoma, almost every indicator points to another prosperous year for most of the state. Stephen C. Matthews, administrative assistant to Gov. George Nigh, said that "thanks to OPEC," which has driven up world energy prices, "the sky is the limit" for his state's growing production of natural gas, oil and coal. "Even a stripper well, producing less than 10 barrels a day, is profitable now," he said, "and the royalties go to the ordinary folks of Oklahoma."