Texas lawmakers want to cut economic ties with Russia amid ongoing war
TEXAS - Supporters of Ukraine were back at the state capitol Wednesday calling for more aid to fight off the Russian invasion. At the same time, under the Capitol Dome, the state House International Relations and Economic Development Committee listened to testimony about cutting business ties with the Russian Federation.
"We want to make sure we are doing the right thing and minimize the damage and maximize the impact and efficiency," said committee chairperson and state Rep. Angie Chen Button (R-Richardson).
Economic analyst Ray Perryman and Pia Orrenius, with the Federal Reserve Bank of Dallas, told the committee the list of imports and exports hit by a break-up is not long. It includes items like Texas-made machinery sold to Russia, as well as imports of Russian wheat, grain and even some oil.
"There's not a single commodity in that entire chain, that there's not a ready market for our exports elsewhere or a ready supplier for the import elsewhere. And you know if you switched from buying it from Russia to buying from somewhere else or selling it to Russia, so somewhere else, the economic impact of that is negligible," said Perryman.
Before the invasion, Texas only had about $18 million of "indirect" investments linked to Russia. The committee was told by the Comptroller’s office the amount now has been reduced to just over a million dollars.
"And that’s across three of our pools of capital, the 11 endowments, the Swift and T-step which is our portion of the Rainy Day Fund we invest. So, when I say we have $1.2 million in indirect that’s of $16 billion invested across those three pools of capital," said Mike Reissig, CEO of the Comptroller's Texas Treasury Safekeeping Trust Company.
The war is causing a drag on the Texas economy, yet the Lone Star State is forecasted to have a growth rate of 3.3% this year. That rate is predicted to out-perform the national economy, says Orrenius, who also spoke about the big regional rebounds from the pandemic that are in full swing.
"We can see that Austin was the first metropolitan area to come back and gain all lost jobs and are now about, I think, six or seven percent above their pre-pandemic level of employment. Followed by Dallas-Fort Worth and San Antonio; just made it so. And these other metros that tend to lag a little bit are the energy metros like Houston, Corpus Christi, but those are coming along. Midland-Odessa is actually also coming along. They're growing fast now," said Orrenius.
Her optimism was qualified with a warning.
"I will note, average wages are still trailing inflation because inflation is running so high. So even a five percent increase in the average weekly wage is not enough to cover, you know, the six or seven percent increase in prices over the year," said Orrenius.
The supply chain also remains a problem. It’s not expected to be corrected until next year. Committee chairperson Button wanted to know if the correction was coming early next year, mid next year, or late next year.
"Based on our survey responses, we're talking about early 2023," responded Orrenius.
Perryman was a little more optimistic saying the supply chain could be back to normal later this year.
"What I would add is there's a huge amount of uncertainty right now because it really depends on what happens, the direction this situation was with Russia and Ukraine goes," Perryman said.
Other negative economic factors mentioned by Perryman include; the rebound of COVID-19 cases in China, and in other parts of the country. As well as federal policy that he testified is hindering oil and gas exploration.