Economy expert Ray Perryman gave an overview of the national, state and local fiscal situations at PlainsCapital Bank’s 10th annual Economic Outlook Conference recent luncheon at the McKenzie-Merket Alumni Center at Texas Tech.
Perryman, who lives in the Midland-Odessa area and is CEO of the Waco-based Perryman Group, has toured the state giving similar presentations for 34 years. His presentations include a bipartisan analysis of how nationwide issues and discussions affect the economy on all levels.
The impact of the tax reform legislation passed last year has been one subject Perryman said he has been asked about often in recent months. He said the hypothesized positive effects of the $1.5 trillion tax cut over the next 10 years may be a bit ambitious, but the move will undoubtedly cause some financial developments.
“You can’t put that much money into the economy and not stimulate some growth,” Perryman said on Tuesday in Lubbock. “That can’t happen.”
One national move Perryman said he was pleased to see was Congress’s passage and President Donald Trump’s approval of a national budget. Perryman said given the current amount of news coming from the federal government, like the Justice Department’s investigation into Russia’s possible role in the 2016 presidential election and continued issues with countries like North Korea, passing the budget was a way to take one issue off of the government’s plate.
“We’ve got plenty of chaos right now. There’s no shortage of chaos,” Perryman said. “If you added in that every few weeks, we had to pass a resolution on the deficit, and every couple of months pass a debt ceiling increase, that may have been too much chaos. That might have set us over the edge.”
Trump’s proposal to implement tariffs on imported steel and aluminum, announced last week, is another national issue Perryman, and other local business buffs, are keeping an eye on. Perryman put his opinion simply: “It’s a very bad idea. I feel that way about most tariffs.
“To universally put a tariff on steel and aluminum, you’ve already seen the price of beer cans and automobiles would go up,” Perryman said. “Countries don’t pay tariffs, people pay tariffs. Consumers pay tariffs, most of it gets passed to them. It could potentially lead to trade wars.”
Benjamin Powell, director of the Free Market Institute at Texas Tech, said in a news release from the university that the tariffs could impact jobs in those industries.
“The United States will produce fewer cars and beer cans, but entrepreneurs will also change how products are made. More Coca-Cola will come in plastic bottles instead of aluminum cans,” Powell’s statement reads. “That will shift labor and capital into the plastics industry at the expense of other industries. These tariffs will cause literally hundreds of millions of such adjustments.”
At the Lubbock National Bank monthly Economic Index report on Wednesday, Lubbock Chamber of Commerce President and CEO Eddie McBride expressed similar concerns that the tariffs could affect in unintended ways.
“We are somewhat concerned about what’s going on with the trade conversations, the tariffs especially, steel and aluminum,” McBride said. “What folks don’t realize is a lot of times it’s not only impactful on their industries, but it could hurt other part of our sectors.”
McBride was particularly concerned about the affect the tariffs could have on the agriculture sector, one of the largest contributors to the West Texas economy.
If the tariffs are imposed, they would go into effect on March 23.
Perryman’s short-term forecast for the national economy shows relatively healthy growth over the next five years. This includes increases in real gross product, jobs and inflation.
Things also looked good for the Texas and local economies. Perryman said a steadily growing population and employment should prove advantageous for the state and Lubbock.