The Federal Reserve's decision to keep interest rates the same appeared to calm the markets Tuesday, with the DOW and NASDAQ closing in the green. Late Tuesday evening, the U.S. Government also agreed to provide an $85 billion emergency loan to rescue financial giant AIG. The Federal Reserve says the company's failure could hurt the already delicate financial markets and economy.
Meanwhile, economists here on the South Plains say our area looks strong. Local experts say area agriculture, education, and healthcare are keeping our economy stable, and they predict it will stay that way.
"We have a solid economy," says Lubbock National Bank Senior Vice President James Arnold. Arnold tells NewsChannel 11 that Texas Tech University is a big contributor to the area's stable economy. It's Lubbock's largest employer, and Arnold says the Health Sciences Center is in expansion mode.
Add in Covenant Medical Center and other hospital growth, plus what Arnold calls a stable agricultural economy, and the region has a reputation for stability. "The big fundamentals for Lubbock, agriculture, healthcare, and education are very stable, very solid, and that plays itself out in the economy," said Arnold.
Lubbock's housing market is also stronger than other parts of the country. "We haven't really been affected that much," says Certified Financial Planner and Certified Professional Accountant Mark Bass with Pennington, Bass & Associates. Bass tells NewsChannel 11 prices have remained steady in Lubbock.
He says the drop across the country played a large role in the current financial crisis. "There was too much money; the houses dropped in price. So, now the mortgage balance is greater than what the house is really worth, and people couldn't pay their mortgages because so many of those mortgages were made adjustable rate mortgages," says Bass.
Bass predicts markets and the economy will recover, though it could take some time. He says the current downfall should lead to two things, one a change in lending practices. "The system became where you would loan money to me, but then you would sell that loan to somebody else, which would make you not as interested in whether I really pay you back or not."
He also hopes it can teach folks not to spend beyond their means. "We really do have a great opportunity as a nation to be more fiscally responsible," said Bass.
Arnold says Lubbock traditionally doesn't follow the upswings or downswings in the national economy and predicts the region will remain stable. "We may feel some of the downswing effects from what's happening on Wall Street, but I think in Lubbock, Texas, with our solid and sound community banking system, it will be minimized."
Bass says this could be a time for folks to re-assess their portfolios, to make sure your investments are diverse, but he does not suggest selling at the moment. He also says this could be a time for potential home buyers to lock in a low interest rate, with a fixed mortgage.