The newly revised data on Houston employment paint a picture of local recession that is little changed from the original estimates. Metro job growth peaked in mid-2009 and has fallen by just over 3 percent—or nearly 90,000 jobs—since mid-2008. However, oil services and manufacturing, which provide many of Houston’s best-paid jobs, declined considerably further than the original estimates.

Texas employment expanded slightly in January, and export growth continued in the fourth quarter of 2009. The energy sector continues to improve as prices pick up. Texas house prices edged up in the fourth quarter of 2009, and housing starts rose nearly 9 percent in January. Texas factory activity expanded further in February.

On March 8, 2010, the Federal Reserve conducted an auction of $25 billion in 28-day credit through its Term Auction Facility. The results of the auction are listed on the Board's website.

The Federal Reserve System's latest Beige Book survey has been released. The Dallas Beige Book, along with a link to the national summary and reports from other Federal Reserve Districts, is available online.

"In theory, the Fed's monetary policy and regulatory functions are separate. In practice, they are anything but—rather, it is a symbiotic relationship. The past two years have highlighted the interconnections of monetary and regulatory policy: Monetary policy depends upon regulation that ensures the soundness of financial institutions."

The trimmed mean PCE inflation rate for January was an annualized 0.8 percent. According to the BEA, the overall PCE inflation rate for January was 2.1 percent, annualized, while the inflation rate for PCE excluding food and energy was 0.1 percent.

"The Federal Reserve’s ability to identify and address diverse and hard-to-predict threats to financial stability depends critically on the information, expertise, and powers that it has by virtue of being both a bank supervisor and a central bank."

According to Dallas Fed estimates, the official government statistics on payroll employment produced by the Bureau of Labor Statistics (BLS) underestimate the number of jobs lost in Texas since employment peaked in October 2008 by around 87,300 jobs.

The Federal Reserve has launched a new interactive website to help consumers better understand the new credit card protections that took effect on Monday, February 22. These rules ban several harmful practices and require greater transparency in the disclosure of the terms and conditions of credit card accounts. The site summarizes the main provisions of the new rules and explains how they will affect credit card users.

Texas factory activity continued to expand in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, edged downward from its January reading but remained positive, suggesting slower growth in output.

The fourth quarter survey showed budding optimism in the Eleventh District agricultural community. Respondents noted recent rains improved conditions for crops and livestock grazing and boosted the crop outlook for 2010.

This issue offers an overview of the ideas presented at our forum "Entrepreneurship in the Changing Economy: From Survival to Sustainability." This report also illustrates how public and private organizations are working together to support and grow small businesses.

U.S. Recovery Progresses—Recent data suggest economic growth may be nearing a pace at which job losses might give way to modest gains. However, debt deleveraging and tight credit conditions will continue to restrain the economic recovery. Growth has been aided by conventional monetary and fiscal policy stimulus efforts and by increased financial flows as once-frozen credit markets continue to thaw.

Roadblocks to Recovery (With Apologies to W. H. Auden and Gershon Bleichröder)—"While it appears urgent, if not agreeable, to use massive public spending to stimulate an economy under duress, an economy cannot sustain long-term growth under the weight of significant fiscal burdens."

"Durable Goods and the Collapse of Global Trade” finds U.S. households cut back substantially on durables purchases in the past two years, which helps explain why U.S. imports have declined much more in the current recession than in the 2001 recession.

On February 8, 2010, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Results of the auction are listed on the Board website.

2009 in Review—A strengthening global economy and increased petroleum consumption firmed oil prices throughout 2009. Prices averaged $62 in 2009, swinging from a low of $34 in February to a high of $81 in late October. Natural gas prices declined for most of 2009 but gained traction later in the year. Prices bottomed out at just below $2 in September before rising to more than $6 at year-end.

Regional Data Support Signs of Recovery—Continuing improvement in the regional economy supports the prospects of a mild recovery. Notably, Texas real GDP increased at a 3.3 percent annualized pace in the third quarter. In addition, total nonfarm employment increased in both October and November and fell slightly in December. Overall, from September to December, jobs were essentially unchanged.

Several economic indicators point to a stabilizing Texas economy, yet employment remains weak. Texas house prices held steady in the third quarter, and the number of housing permits rose in December. Real Texas exports have increased two quarters in a row. Texas factory activity expanded in January, with the production index climbing further into positive territory.

The conference organizers welcome submissions of theoretical and empirical contributions for the conference "Microeconomic Sources of Real Exchange Rate Variation" to take place September 24–25 at Vanderbilt University. Relevant topics include

• quantitative theoretical models of real exchange rates and/or trade patterns;
• the role of borders, distance, exchange rate regimes, productivity variation, and tastes and technology in shaping the long-run cross-sectional patterns of relative price dispersion; and
• the drivers of the business-cycle variation in real exchange rates around their long-run means.

The Federal Reserve has launched a website to help new bank directors learn how they can work to ensure the safety and soundness of their institutions. The website, BankDirectorsDesktop.org, also provides a refresher course for experienced board members.

Global Growth Shows Signs of Improvement—Signs of a global recovery continue to appear around the world, particularly in the U.S. and emerging markets. Increases in output and international trade have allowed growth prospects for major economies to be revised up. However, rising commodity prices and stimulative monetary policies have caused inflationary pressures to build in emerging markets. Although monetary policy in most advanced economies remains accommodative, the run-up of public debt could stymie economic growth.

The trimmed mean PCE inflation rate for December was an annualized 0.6 percent. According to the BEA, the overall PCE inflation rate for December was 1.2 percent, annualized, while the inflation rate for PCE excluding food and energy was 0.9 percent.

The FOMC will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

A Historical Look at the Labor Market During Recessions—In terms of its toll on employment, the current recession exceeds all other post-World War II downturns—but the job losses have fallen far short of those in the Great Depression, according to the latest issue of the Dallas Fed's Economic Letter.

This new web-based application that will allow banking organizations supervised by the Federal Reserve System to submit regulatory filings online, either directly or through their authorized representatives.

Texas factory activity expanded in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key indicator of state manufacturing conditions, climbed further into positive territory as more producers reported either increased or unchanged activity from December.

Limited Asset Market Participation and the Consumption-Real Exchange Rate Anomaly—Shows that the "consumption-real exchange rate anomaly" can be explained by a simple model in which a subset of households trade in complete financial markets, while the remaining households lead hand-to-mouth lives.

Size and Composition of the Central Bank Balance Sheet: Revisiting Japan's Experience of the Quantitative Easing Policy—Re-examines Japan's experience of the quantitative easing policy in light of the policy responses against the current financial and economic crisis.

Transitional Dynamics of Output and Factor Income Shares: Lessons from East Germany—Evaluates the quantitative implications of technology change and government policies for output and factor income shares during East Germany's transition since 1990.

Houston at year-end showed clear signs of sustained economic improvement: Job losses continued to shrink, the unemployment rate fell slightly and the local purchasing managers were increasingly optimistic.

The Federal Reserve System's latest Beige Book survey has been released. The Dallas Beige Book, along with a link to the national summary and reports from other Federal Reserve Districts, is available online.

Risks to Sustained Economic Recovery (With Lessons Learned from Winston Churchill and Teddy Roosevelt)—"If the Congress is not careful and ends up where it is going in tampering with the independence of the Federal Reserve, it will indeed lead us down the path to the politicization of the central bank of the world’s greatest economy, putting the United States on a road that leads directly to economic ruin."

Federal Reserve approves final rules to protect credit card users from a number of costly practices —The Federal Reserve Board on Tuesday approved a final rule amending Regulation Z (Truth in Lending) to protect consumers who use credit cards from a number of costly practices. Credit card issuers must comply with most aspects of the rule beginning on February 22.

Term Auction Facility—On January 11, 2010, the Federal Reserve conducted an auction of $75 billion in 28-day credit through its Term Auction Facility. Results of the auction are listed on the Board's website.

"Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates."