With tax overhaul as ‘tailwind,’ regional economy surged, Dallas Fed says: Economic activity in Texas and parts of two neighboring states surged over the past six weeks, as the federal tax overhaul boosted confidence across a wide range of businesses in the region, according to a report last week from the Federal Reserve Bank of Dallas.
In its chapter of the Beige Book, an anecdotal report on the economy compiled every six weeks by the Federal Reserve banks, the Dallas Fed said the economy in its district expanded at a “robust” pace after mostly moderate or modest growth in recent years.
The Dallas Fed’s district includes all of Texas and parts of New Mexico and northern Louisiana. Texas accounts for more than 95 percent of the economic activity in the region.
The district saw demand accelerate across virtually all sectors over the past six weeks, the report said.
While contacts expressed some lingering concerns — most notably about trade policy and the potential renegotiation of the North American Free Trade Agreement, or NAFTA — business outlooks grew more optimistic. Most credited the tax overhaul, expected to be a “tailwind” for business, the report said.
The rosier outlooks helped boost hiring, which picked up over the past six weeks. The greater demand for workers, along with continued difficulty finding qualified employees, continued to nudge wages higher.
“Labor market tightness continued in most industries and across a wide range of positions,” the report said, “with several contacts saying difficulty finding workers was constraining growth to some extent.”
Factory activity surged during the period, with demand and output both strengthening toward the end of last year, particularly at high-tech and transportation equipment plants. Many manufacturers noted increased spending plans for 2018, despite concerns about finding skilled labor and potential NAFTA changes.
Retailers also noted an acceleration, thanks in part to a rebound in auto sales after a softening in the prior six-week span. Sales along the Texas-Mexico border remained soft, the report said, but demand has rebounded around the oil patches.
Could Austin become home to new Apple corporate campus? Turns out Amazon isn’t the only tech giant looking to create a second headquarters.
Apple, which already has a significant presence in Austin, said last week that it wants to spend as much as $30 billion on a new corporate campus and additions to its existing work sites across the country.
The headquarters of Apple, the world’s largest consumer electronics company, is in Cupertino, Calif.
The building spree will create an estimated 20,000 new jobs nationwide, Apple said.
Apple said it expects to announce where the new corporate campus will be located later this year. The company didn’t say how big the second campus will be, or how many of the additional 20,000 workers that it plans to hire will be based there.
In Austin, Apple’s existing 38-acre complex at West Parmer Lane and Delcour Drive is home to the company’s 1.1 million-square-foot Americas Operations Center, which runs many of its corporate functions throughout the northern hemisphere.
Direct Apple employment in Austin has tripled in the past 10 years, according to the company, making it Apple’s second-largest U.S. hub outside of Cupertino.
Late last year, Apple said its Austin workforce totaled about 6,500 people. That makes Austin the company’s second-largest U.S. hub outside of Cupertino.
Apple CEO Tim Cook visited the Austin campus in August to mark Apple’s 25th year in Austin.
“We started with 100 people back in ‘92,” Cook said in an interview with the Statesman. “Now we’re at over 6,000 and if you look at the teams, they include customer support, online sales, retail sales, we have our Maps team here, and finance and a huge engineering team that’s growing fast. Literally, many, many pieces of our company are here.”
Apple executives said the company’s new $350 billion commitment to the U.S. will be partially financed by an upcoming windfall from the country’s new tax law.
Apple’s pledge came less than a month after Congress approved a sweeping overhaul of the U.S. tax code championed by President Donald Trump that will increase corporate profits. In addition to dramatically lowering the standard corporate tax rate, the reforms offer a one-time break on cash being held overseas.
Apple plans to take advantage of that provision to bring back about $252 billion in offshore cash, generating a tax bill of roughly $38 billion. It’s something that Cook promised the company would do if it could avoid being taxed at the 35 percent rate that had been in effect under the previous tax law.
About $75 billion of the $350 billion in U.S. investments will be paid from money that had been overseas, Apple estimated.