The Texas economy remains robust despite the recent plunge in oil prices which went from a high of $107 a barrel in June to $51 a barrel in October. With the Texas rig count down 58% from a year ago the energy sector has seen some decline, however, according to the Dallas Federal Reserve due to the foresight of energy companies, "refining, petrochemicals and service industries are managing to offset oil-producer woes."
The last time oil prices tanked in 1986 this precipitated the savings and loan crisis in Texas leading to an unemployment rate of 9.2% (compared to the national average at the time of 7%). Today, even with the decline in energy prices the Texas economy has continued to create jobs with an unemployment rate of 4.3% which is below the national average of 5.5%.
The city of Austin illustrates how the Texas economy has diversified across a range of industries and services. It has been on the forefront of a surge in scientific and technical service jobs and now leads the nation as the top technology exporter surpassing the longtime leader, California.
In addition to a diversified economy, Texas has also experienced sustained growth in housing prices which are up a remarkable 8% over 2014 according to the Federal Housing Finance Agency's house price index. This is reflected in the staggering rally in the construction industry which has added jobs at an 8.8% annual rate in July after four consecutive months of declines.
As we approach the end of 2015, the outlook for the year ahead is positive. Recently elected Governor, Greg Abbott has signed into law tax cuts amounting to $4 billion over two years as well as reducing franchise and property levies. The economy is diversified and construction remains resilient. Overall, despite the energy bust and other headwinds the Texas economy is set to add jobs and continue to offer opportunities for growth.
|The Texas Leading Index is a single summary statistic that sheds light on the future of the state's economy. The index is a composite of eight leading indicators—those that tend to change direction before the overall economy. They include the Texas value of the dollar, U.S. leading index, real oil price, well permits, initial claims for unemployment insurance, Texas stock index, help-wanted index and average weekly hours worked in manufacturing.|