(The Center Square) – Out of the top 10 mineral-producing states that lead economic gross state product growth nationally, “economic juggernaut” Texas is forecasted to be the only U.S. state in the top 10 in 2025, ranking third among the others, according to S&P Global Ratings.
In 2023, there are five mineral-producing states ranking among the top 10 for real GSP growth nationally. By 2024, S&P Global Market Intelligence forecasts that only two will remain in the top 10. It is projected that Texas will be the only state by 2025, according to the Aug. 3 report.
“While the U.S economy has proven resilient, S&P Global Market Intelligence’s baseline scenario forecasts latent effects of the Federal Reserve’s actions to stamp out stubborn and unsustainable price inflation could signal a period of a higher-for-longer interest rate environment, leading to a shallower and attenuated slowdown in economic activity,” according to the Aug. 3 report.
While the slowdown is projected to create a period of stalled economic conditions for other states that rely on mineral production, the report said, “only Texas significantly exceeds the national median rate, by nearly 2x, supported by its broad and diverse economy and population growth over the last decade.”
Mindful spending, forecasting, and reserve management are important for mineral-producing states’ credit stability.
Management practices in mineral-producing states could include implementation of limits on recurring expenditure growth relative to revenue projections and prioritizing operating surpluses during good economic times to build rainy day savings, according to the report.
If sustained over the long term, S&P Global Ratings believes management practices could help mineral-producing states avoid substantial credit deterioration.
