The State of the Economy...and the Presidential Election

Joblessness in Texas reached its highest rate in four years in June, jumping to 8.3 percent.

That's not as bad as it sounds, economists here say. Over the past year, Texas added 80,000 jobs - a meek 1 percent, but worth bragging about compared with the 180,000 net job growth for the nation. "We are not in a recession," says Keith Phillips, an economist at the Federal Reserve Bank of Dallas.

The problem is that the work force is growing faster than employment, says Susan Tully of the Texas Department of Commerce.

So while other economic indicators are gradually strengthening, "employment is where the recovery is not proving itself," she says, adding that an increase in consumer confidence would "eventually become self-fulfilling."

The energy and defense industries are languishing. But exports to Mexico of electronics, transportation equipment, oil-field equipment, computers, and chemicals have surged 16 percent as a whole. And banks are reporting handsome profits. Unfortunately, they're making money by purchasing treasury securities rather than lending to corporate customers.

Dallas Fed senior economist Jeffery Gunther says many businesses can't borrow because the oil crash of 1986 shrank the collateral value of their real estate.