A last look at things as they were: Texas attitudes on the economy on the brink of recession

National economic projections get grimmer by the day, and with oil struggling to stay above $20 per barrel, Texas isn’t going to be buffered from the crash as it was after 2008’s housing market implosion. A widely-reported J.P Morgan research note, called according to Axios “The Day the Earth Stood Still”, predicted second-quarter economic contractions of -14% and -22% in the U.S. and Europe, respectively, late last week. Things haven’t gotten any better since then.  

In Texas, Comptroller Glen Hegar shot a potent dose of reality directly into the veins of the legislature with a weekend conference call in which he reportedly used the term “recession” repeatedly, telling appropriators, according to a Quorum Report paraphrasing, that “revenues will continue to drop during the biennium and the general revenue end balance – which had previously been anticipated to come in around $2.9 billion – will instead be a negative ending balance when lawmakers meet again in a regular session in 2021.” Forty-eight hours later, the Comptroller was warning of significant increases in the state unemployment rate, and, shortly thereafter, offering short-term payment agreements and waivers of penalties and interest to businesses “struggling to pay the full amount of sales taxes they collected in February.” More theatrically and much, much less seriously, Lt. Governor Dan Patrick seemingly offered to sacrifice his life and perhaps others of his generation to save the economy from the ruin produced by social distancing.

Texans’ attitudes toward the overall trajectory of the state have been remarkably stable over the last several years, scaffolded by the state’s sustained economic and population growth, and the relatively stable and consistent policy environment created by a generation of comprehensive governance by the same political party. While the politics remain up in the air, with spring elections being postponed right and left, and the underlying political fundamentals potentially disrupted by the foundational impact of the pandemic at all levels, the structural elements of the economy that have informed Texans’ attitudes about that economy have changed drastically in the last two weeks (to say the least), and seem likely to continue to deteriorate, even if the rate of decay is slowed by fiscal and monetary policy. On the brink of change, we consider the point of departure for inevitable shifts to come in assessments of the direction of the state.

If we look back at University of Texas/Texas Tribune polling data since February 2010, the default right track/wrong direction question about Texas has been net positive for most of the decade. Only two of 33 polls between October 2009 and February 2020 found overall opinion dipping into net-negative territory (more Texas voters saying “wrong track” than “right direction”), and one is probably an outlier. 

Partisanship influences these assessments. Among Republicans, the gap averaged +46 points in this period, and was +70 in our most recent poll in February 2020 – prior to both the oil crash and the wide recognition of the seriousness of pandemic – when 80% of Texas Republicans said the state was headed in the right direction, and only 10% said we were on the wrong track. Among Democrats, the gap averaged -38 points in the same period, and was -45 in the most recent pre-pandemic/oil collapse poll.

Asked about the Texas economy in the February UT/TT Poll, only 15% of Texas voters said that the state’s economy was worse compared to a year ago, but, again, there were important partisan differences in these attitudes that will bear watching in the state-level polls to come. Among Texas Republicans, 36% said they were doing a lot better off compared to a year ago, 35% said they were somewhat better off, and 22% said they were about the same. Democrats weren’t deeply negative, but they were less likely to reflect positively on the state’s economy: only 6% said a lot better off and 11% somewhat better off – and 50% said about the same. 

Some of this difference is likely attributable to the different class compositions of each party’s constituencies – we should expect a larger share of Democrats to be less prosperous and thus less likely to see their situations improving. But some of this gap is likely attributable to a familiar dynamic in which, all things being equal, partisans take a more positive view of economic conditions when their party is in power and “owning” the economy, and are more skeptical when their party is out of power and has no (surface) accountability for the current conditions. This dynamic is most starkly evident in partisan assessment of the national economy, per the charts below.

The rapid slowdown in the economy – triggered by the conjunction of a collapse in oil prices as a result of maneuvers by Saudi Arabia and Russia along with the huge reduction in economic activity resulting from efforts to slow the spread of the COVID-19 virus – is triggering a huge shift in most Texans’ economic situations that will provide a challenging test of the degree to which partisan perceptions can offset the combination of personal experience with an objectively crashing economy and multiple signals from media and elites about dire conditions. In addition to the string of bad news from the Comptroller, the Texas Workforce Commission reported Wednesday that "more than 800,000 people have been trying to contact the agency, including over 100,000 calls on March 22", and that "TWC has processed 150,000 claims this week," according to Dom DiFrio's coverage in the Dallas Morning News.  

The most pressing overarching policy question is how effectively both the national and state political leadership can respond to a crisis of unprecedented proportions. (And this is not alarmism, despite the increasingly desperate Pollyannaism and blatant misdirection going around. Unemployment claims this week topped 3 million, shattering previous records, while confirmed deaths from the virus in the U.S. are increasing at an alarming rate.)

Texas government responses will be shaped by public attitudes, and in particular whether these deep partisan influences over perceptions prevail as disaster sweeps over the state and the nation. In Texas, the combination of partisan polarization, so deep that it colors even the most objective facts, and the dominance of one party for so long, have narrowed the range of potential policy responses into a small box dominated by expectations of growth, relative prosperity, and the enforcement of policy bounds by a de facto monopoly party. The first two economic expectations are no longer being met. The fundamentals of the third are about to be severely tested – and the leading indicator of those tests will be how much public perceptions shift beyond the comfort zone that has cushioned the current set of statewide leaders for the entirety of their political careers.