In the summer of 2010, the recovery was cooling and Texas appeared, comparatively, on fire. Its major metro areas claimed four of the top five spots in the Milken Institute's Best Performing Cities Index, four of the top ten of Forbes' "Cities Where the Recession is Easing," and another four spots in last year's Top Ten in Homebuilding. Its state debt ranked fourth best in the country. CNBC had recently named Texas the Top State for Business for the second time in three years.
Now what? Texas suddenly faces a deficit of $25 billion over the next two years -- arguably worse than New York. The state unemployment rate has stubbornly latched to 8.2 percent, also tied with New York. Paul Krugman seem pretty sure of it: The "Texas miracle" was a mirage.
Not to take anything away from state governance (which can and does make a difference) but Texas' success in the Great Recession, like its devastation in the S&L Crisis, has a great deal to do with fundamentals.
Whether or not Texas has cultivated a uniquely successful business environment at the state level, it's pretty clear that many of Texas' largest cities are uniquely positioned to withstand the recession. As a general rule, the cities that survived the recession avoided the housing boom and clung to strong government-backed sectors, like health care, higher education, and military.