Don't Mess with Texas - Federal Contract Spending Cuts and the Texas Economy

Today Chmura released the second in a series of white papers examining the reliance of states on federal contract spending. Firms in Texas received $39.0 billion in federal contract awards in fiscal year (FY) 2013 in the United States —more than all other states except Virginia ($51.2 billion) and California ($47.6 billion). The Lone Star State boasts plentiful natural resources and an advanced industrial sector which are two of the reasons it is a large recipient of federal spending. Major metropolitan statistical areas such as Dallas, Houston, and San Antonio rely on this spending to support economic growth, particularly since the slow recovery from the Great Recession of 2007 to 2009.

The Reliance of the California Economy on Federal Contract Spending

California, the largest state economy in the nation, benefits from billions of dollars of federal contract spending each year. Chmura Economics & Analytics estimates that 1.8% or 280,364 of California’s jobs were directly supported by federal contract spending in fiscal year (FY) 2013. Metropolitan areas such as San Diego and industries such as manufacturing and professional and business services have a higher level of dependency on federal contract spending. Leaders in those regions and industries need to be prepared for future reductions in the federal budget.