Dallas Fed Economist: Slower Growth Ahead for Texas Economy as Impact of Low Oil Prices Spreads
For immediate release: May 9, 2016
DALLAS—Texas will likely see continued job growth this year, but at a slower pace as the impacts of low oil prices ripple through the economy, said Federal Reserve Bank of Dallas economist Emily Kerr in the Bank’s latest Texas Economic Update video.
State job growth has slowed to a 1.1 percent annualized pace in the first quarter of 2016, according to the Dallas Fed’s most recent Regional Economic Update. That’s down from 1.3 percent growth in 2015 and 3.7 percent growth in 2014, when oil prices were still high for much of the year.
“Low oil prices continue to inflict damage on both the energy and manufacturing sectors,” Kerr said. “But this year we’re seeing less offsetting growth from the service sector, and that’s also contributed to the slowing pace that we’re seeing in job growth this year.”
The Houston metro area has been hit hardest by the oil bust, losing 5,500 jobs so far this year. However, other Texas metros are beginning to feel the effects as well.
“Economic growth in Austin and in Dallas continued to boom in 2014 and even through 2015 but now in 2016 so far we’ve seen a deceleration in job growth in those metros,” Kerr said. “[They’re] still growing—unlike Houston that saw declines—but at a much slower pace, and that’s largely a result of these spillover effects from the contracting energy sector and slowing in Houston and some other areas starting to impact the Dallas and Austin metros.”
Nevertheless, there are some bright spots in the Texas economy, including real estate and job growth in the leisure and hospitality and education and health sectors, Kerr said. She also pointed to a March rise in the Dallas Fed’s Texas Leading Index, a single summary statistic that sheds light on the future of the state’s economy.
“Despite the weakness that we’re seeing in Houston and the energy sector and the slowing that we’re seeing in some of the other sectors, we do expect the Texas economy to post positive job growth this year, which I think is a testament to the resiliency in the Texas economy,” she said.
Kerr is a business economist at the Dallas Fed.
Federal Reserve Bank of Dallas
Phone: (214) 922-6748