Debunking the ‘Texas Miracle.’

Rick Perry’s war against government suffers from funny math. The Texas governor and GOP presidential candidate claims his hands-off approach to job growth–scant regulation, low taxes and close business ties–is the secret behind the “Texas miracle.” Texas has created nearly as many jobs during Perry’s decade-long tenure as the rest of the country has lost. But while tax credits have lured more business into the country’s second largest state, the bulk of job growth has been in government, which upped hiring–off the back of an energy-sector boom and with help from the federal dole–even as other states cut workers. Now, looming state budget cuts could set the “miracle” back. Already, a dip in government jobs contributed to a rise in Texas’ jobless rate, from 8.2% in June to 8.4% in July.

The Economic Cycle in the Lone Star State

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1 Commodity prices rise

Rising demand for energy and materials in emerging markets, together with a falling U.S. dollar, drove up commodity prices for oil, gas and minerals, fueling big Texas industries.

Oil prices rose 265%

2000–2010

2 Oil and gas boom

Massive investments in the oil, gas and mining sectors helped Texas create jobs and growth during the downturn and absorb a booming population. During Perry’s tenure, oil-and-gas jobs have grown by more than 40%.

GAS, OIL AND MINING OUTPUT IN 2010

$114 billion

UP 166%

2000–2010

3 Government spending increases

Steady profits in oil and gas–coupled with a steep rise in federal spending for Texas’ military installations and NASA over the past decade–helped boost state coffers and shield the state’s workforce from a deeper recession.

Increase in total spending

(PUBLIC AND PRIVATE) 65%

Increase in government spending 76%

2000–2010

4 Public-sector jobs grow

Despite the go-it-alone image Perry cultivates, private-sector jobs have fallen by 0.7% since December 2007, when the recession hit, while public-sector jobs have grown by 3.7%.

Public-sector jobs +19%

Private-sector jobs +8%

2000–2010

5 Unemployment falls

In the wake of the Great Recession, Texas, the second largest U.S. state, received the third highest level of federal stimulus money, after New York and California, which helped the Lone Star State balance its budget and create more jobs.

Unemployment in 2010

U.S. 9.6%

Texas 8.2%

Sources: Bureau of Labor Statistics; Bureau of Economic Analysis; Energy Information Administration