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By Business Facilities Staff
From the July/August 2012 issue
Dallas Fed Chief Richard Fisher recently appeared in state videos discussing why Texas is outperforming other states in a sluggish economy. Here are excerpts, presented in our Q&A format.
BF: Why is the national economy still sputtering, with businesses wary to expand?
RF: The [U.S.] banking system is flush with liquidity. We have trillions of dollars sitting fallow in the banks of the United States. Outside of the banking system we have several trillions of dollars that are sitting on businesses balance sheets. [Businesses are] uncertain about the future and they’re not going to hire and expand until they get better clarity.
BF: What is holding back business expansions and job growth?
RF: Nobody knows what taxes are going to be in the next Congress or in the lame-duck period. Going forward they don’t know what their tax rates going to be, they don’t know how the federal government is going to spend money or how it’ll be distributed and impact their customer base or themselves. Why would you hire somebody unless you were confident that you knew what it was going cost you, and unless you were confident that the rest of the world was going to have demand for your product and the service you’re creating? And right now the rest of the world doesn’t look very good.
BF: Texas is an economic bright spot. How well is the Lone Star State doing?
RF: If Texas was a separate country, we’ve outperformed Australia and Canada, Germany, France, the United Kingdom and Japan, the Eurozone and [the rest of] the United States. We are a well-performing economy, we are a very a diverse economy and we run the largest export business of any state in the U.S. We passed California seven or eight years ago and we are sellers to the world. Just taking chemicals alone, we are exporting an enormous amount, but we’re also exporting finished goods, services and other things because we are the most vital, or at least the most powerful, economic plant within the United States.
BF: Has the recovery in Texas been stronger than in the rest of the U.S.?
RF: We’re the only large state that has punched through its previous peak employment levels before the great financial crisis of 2008-2009 and the Great Recession that followed.
BF: What has enabled Texas to bounce back so quickly?
RF: One of our advantages in Texas is that we have a state Legislature, under both Democrats and Republicans, that has been pro-business. They have been minimal in their regulatory influence on our society. Our [state] government sends us the right signals: a pro-business mentality and limited interference.
BF: Should other states try to replicate the success in Texas?
RF: Governors of other states and commentators like The Wall Street Journal and others who are opinion-makers are saying the rest of the country needs to be like Texas and not vice versa. So I think we are setting the standard and we should be proud.