TRENDS

Is the “Texas Miracle” Losing Steam After Years of Record Population, Economic, and Job Growth?

Everything is bigger in Texas — its growth ambitions included. Affordable real estate, low taxes, and the promise of minimal government involvement in the lives and work of its businesses and residents have fueled what locals call the “Texas Miracle,” helping the state double its population since the 1980s. But as the state has gone mainstream, keeping that miracle alive for millions of new residents has become a challenge.

Call it a Miracle: Since 2015, the Lone Star state has ascended in American commerce, with over 300 corporations relocating from states like California, Illinois, and New York. With its newfound business leadership, Texas is one of the fastest-growing states in terms of job, economic, and population growth.

• Thanks to new corporate arrivals, Texas now boasts more Fortune 500 firms than any other state — 55 in total.

• Its popularity has hit a fever pitch, with five of the ten fastest-growing metro areas in the US being located in Texas — and its civilian workforce reaching a record 15.3M people in June.

Wish Upon a Star

Despite its successes, Texas may face hurdles in sustaining its growth. Last week, FT reported that the state’s appeal is diminishing among its 30M+ residents — and some of the hundreds of businesses that helped it become a formidable force on the national stage.

• Texas’s infrastructure is struggling to keep pace with its expansion — with issues in power grids, water utilities, and public services causing the state to fall out of the first five rankings in CNBC’s America’s Top States for Business last year.

• Companies drawn by Texas’s “business-friendly” reputation are now concerned about potential backlash from conservative politicians over issues like diversity and environmental policies.

Trouble in Texas: Texas has appreciated a lot of wins, but 2024 has marked a few losses. In April, Oracle announced that it would relocate from Austin, TX, to Nashville, TN — marking a rare departure from the state. In the following weeks, Tesla — which became Austin’s largest employer after relocating during the pandemic — laid off nearly 3K workers. State leaders have downplayed these events as unfortunate hiccups — but there’s a chance that Texas’s meteoric run might be out of steam — and it may need another miracle to maintain the growth it has seen.

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LARGECAP RECAP

💼 For College Grads, These Metros Are the Best (And Worst) Places To Start A Career

The economy is teaching young college grads a tough lesson: beggars can’t be choosers. Since the pandemic, the unemployment rate for workers aged 20 to 24 has risen, and companies are cutting back on recruiting to invest in artificial intelligence. Employers are still hiring — just not necessarily where people might expect. A new report from payroll company ADP highlights the top job markets for recent grads — considering the cost of living, wages, and hiring rates in their formula.

• According to the report, Raleigh, NC; Austin, TX; and Baltimore, MD, are the “most promising locations” for new grads to find work — followed by Atlanta, GA; Charlotte, NC; and New York City, NY.

• On the other hand, Rochester, NY; Virginia Beach, VA; and New Orleans, LA, are the “lowest ranking metros,” with the lowest wages and weakest hiring.

Sun Belt shindig: Many young people are drawn to more expensive markets like San Jose, CA; Seattle, WA; Chicago, IL; and Boston, MA — which ADP says offer high compensation… if you can secure a job. However, these cities are often overshadowed by Sun Belt metros, which have seen the majority of US job creation since the pandemic.

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Markets & Economy

Eurozone economy outperforms estimates: The euro area’s GDP grew by 0.3% in Q2 2024, beating the expected 0.2%. Ireland and Spain led the growth, while Germany saw a contraction. [Read]

Commodities hit fresh 2024 lows: A sharp decline in commodity prices, fueled by concerns over China’s economic slowdown, overshadows optimism in US markets. This slump particularly impacts energy stocks, highlighting global economic uncertainties. [Read]

Pharma giants blast past earnings expectations: Pfizer ($PFE) and Merck ($MRK) exceeded Q2 2024 earnings estimates. Pfizer reported a quarterly adjusted EPS beat of 30%, while Merck posted an adjusted EPS 6% above expectations, driven by strong product sales. [Read]

Business & Wealth

US voices concerns over Venezuelan election: The Biden administration is calling for a full release of Venezuela’s election results, citing “serious concerns” over democratic norms and discrepancies with official results. [Read]

Dubai attracts UK millionaires amid tax changes: The UAE is set to gain 6.7K millionaires in 2024, making it the world’s top wealth magnet for three consecutive years. A significant portion comes from the UK due to plans to scrap the non-dom tax regime. [Read]

X’s revenue plummets under Musk: Internal documents reveal X’s quarterly revenue dropped 53% year-over-year to $114M. CEO Linda Yaccarino faces challenges wooing back advertisers amid Musk’s controversial actions, despite claims that 65% of departed brands have returned. [Read]

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DIGIT OF THE DAY

US National Debt Hits Record $35T, Expected to Climb Higher

If we had a dollar for every time the debt ceiling was raised... oh wait, that’s the problem. On Monday, the US national debt soared past $35T, up from $34T in January. This rapid increase is fueled by the escalating costs of rising interest rates and federal spending, making it even harder to manage the nation’s debt problem.

• The Congressional Budget Office (CBO) estimates that the public portion of the debt will equal 99% of the Gross Domestic Product (GDP) this year.

• Some federal programs, such as the Employee Retention Tax Credit and Inflation Reduction Act, have added to the debt, as companies have paid less in taxes.

Red ink remedy: This year, the government is on track to record a $1.9T deficit, the third-largest in US history. The deficit could lighten if interest rates drop later this year, making it cheaper to service the debt. However, there are differing opinions on how to tackle the debt issue. Democrats propose reducing the deficit by $3T over ten years by increasing taxes on the wealthy and large corporations. Conversely, Republicans advocate for spending cuts, particularly in federal programs, to solve the debt crisis. If the current trend continues, the CBO projects the national debt will reach $56T by 2034.