Texas Job Growth 'Firing On All Cylinders,' Says Fed
Texas had a 3.8 percent unemployment rate in November, according to the Federal Reserve Bank of Dallas’ 2018 economic forecast. It is the lowest rate they have seen they started monitoring it in 1976.
Dallas Fed’s vice president and senior economist Keith Phillips said in 2017 the state's job growth was 2.5 percent, but next year it will grow more quickly at 3 percent, adding 366,000 jobs. Phillips described Texas as “hitting on all cylinders” with broad-based growth driven largely by energy and manufacturing.
"It's hard to find any areas of weakness, either across regions or across industries," he said.
The state now ranks third in job growth nationwide, a dramatic difference from 2015 when it was 31st as a result of a shrinking energy sector.
San Antonio was largely unfazed by depressed oil prices in 2015 and 2016. According to Fed data, the city saw around 3 percent growth those years, powered by federal spending, health care and leisure and hospitality. San Antonio grow 3 percent in 2017 despite the federal government spending less in the city.
Phillips highlighted oil and gas, rebounding with prices above $40 a barrel. He says the industry is again a driving force for the state.
Texas Alliance of Energy Producers economist Karr Ingham said whenever you see the rig count go up and prices strong, it's good for Texas.
"I think that’s what we have seen in 2017 with a strengthening of all these things: general spending, tax collections, and jobs being added, and a decline in the unemployment rate," he said.
Texas has the third fastest job growth nationwide, which makes Texas Association of Business CEO Jeff Moseley and his members happy.
"Very, very bullish,” Moseley said. “We feel like 2018 should be good news for every business in the state of Texas."
Texas could be a victim of its own success, with low unemployment rate and a lack of workers hampering further growth. To address this potential shortfall, Moseley said retraining of domestic workers is very important, and reauthorizing NAFTA is vital to Texas' future.
"If NAFTA can be reapproved, we think the agriculture sector has a very bright future and also technology,” Phillips said.
Texas ranks fourth in the number of jobs connected to exports, 40 percent of which go to Mexico, according to the Fed’s Keith Phillips, who touted the importance of maintaining trade patterns in light of troubled NAFTA renegotiations.
“Trade in general helps every country at the bottom do what they are best at doing, and the pie grows,” said Phillips, who describes himself as a free trade advocate whose opinions don’t represent the Federal Reserve banks.
“Not all job growth is equal,” said Phillips, highlighting the disparity of growth among Texas’ middle class.
“It’s mostly the middle class that has been seeing the weakest job growth and wage gains,” he said.
Phillips and the Fed predict that will change now that the nation is near full employment.