‘We live and die by the price of oil’: Texas business executives sound off on Trump, tariffs, and more in new survey

Employees work Audi production line German car manufacturer plant San Jose Chilapa MexicoHenry Romero/Reuters

  • The outlook among manufacturing business executives in Texas worsened in December, underscoring frustrations around trade-related uncertainty within the manufacturing sector nationwide.
  • The latest survey from the Federal Reserve Bank of Dallas showed both its general business activity index and company outlook index plunged to their lowest levels since mid-2016.
  • Data for the survey was collected between December 18 and 26, during a particularly volatile time in the financial markets. 
  • “We face great uncertainty for the near future,” one respondent wrote. “The economic policies of President Trump are causing unnecessarily volatile pricing and unpredictable outcomes.” 

Executives in Texas have grown more negative in their overall business outlooks, according to the latest reading from the Federal Reserve Bank of Dallas, accentuating broad tariff-related concerns across the manufacturing sector nationwide.

Several measures of business activity dipped in December, including the general business activity index and the company outlook index, which both plunged to their lowest levels since mid-2016.

The survey’s production index — a critical measure of the state’s manufacturing conditions — fell by one point to mark its fourth straight month of slowing output growth, a departure from the more robust expansion it saw earlier this year.

Read more: These 6 maps show how the American economy is doing right now

“The weakness in this latest Texas manufacturing report is consistent with what we’ve seen from the other regional Fed manufacturing reports released this month, which showed declines in the respective headline indexes,” Emily Kerr, senior business economist at the Federal Reserve Bank of Dallas, told Business Insider in an email on Monday.

“Taken together this suggests a notable slowing in the pace of expansion in December, although these surveys do not cover all areas of the country.”

The Texas manufacturing outlook survey's production index.Federal Reserve Bank of Dallas

Anonymous comments from the survey’s respondents, which the Federal Reserve Bank of Dallas edits for publication, pointed to “declining oil prices, labor constraints, political uncertainty, higher interest rates, and reduced activity in the housing and energy sectors” as factors restraining growth or weighing on outlooks, Kerr said.

Here is a selection of comments from the survey’s respondents, along with their specific area of manufacturing.

  • Machine manufacturing: “We live and die by the price of oil. With the oilfield down, we see less orders.”
  • Primary metal manufacturing: “Interest rate increases are the main potential problem to continued good times.”
  • Fabricated metal product manufacturing: “Housing is definitely seeing an impact from various variables such as interest rates, tariffs and a tight labor market in construction. Beginning in October of 2018, we had seen a dramatic shift down in sales of windows and doors for the residential market.”
  • Transportation equiptment manufacturing: “We are a defense contractor. The lack of decisive direction-setting on the part of the federal government continues to create an element of uncertainty in our planning processes.”
  • Printing and related support activities: “Political uncertainty and volatile markets make for a lousy investment climate. Major capital projects will be put on hold for a while until I see what is happening.”
  • Miscellaneous manufacturing: “Because of the tariffs, the aluminum and steel pricing is continuing to increase, and mills domestic and abroad are at capacity, so supply disruption is occurring. To add to rising costs, metal scrap-market values have been steadily decreasing, especially in aluminum. We face great uncertainty for the near future. The economic policies of President Trump are causing unnecessarily volatile pricing and unpredictable outcomes.”

The concerns surfacing among manufacturers in Texas are likely being felt outside the state, too.

“Texas is among the strongest centers for manufacturing across the nation, and slowing here is likely to be echoed elsewhere,” said Ray Perryman, president and CEO of the Perryman Group, a Waco, Texas-based economic research and analysis firm. “At the same time, as a very export-oriented state, Texas may feel global shifts before some areas.” 

Perryman said while manufacturers have indeed become far less optimistic, most indicators remained in positive territory.

“The biggest challenge is uncertainty in the national economy, particularly regarding trade agreements,” he told Business Insider in an email on Monday. “Texas manufacturing businesses are inextricably linked to the world economy, purchasing needed input materials and parts and selling in countries around the globe ($1 in every $6 of US exports are from Texas).”

Data for the survey was collected between December 18 and 26, during a particularly volatile time in the financial markets. Of the 112 Texas manufacturers who responded, more than 20%  noted their outlook worsened this month.

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