North Texas Economy Strong But Exposed to Fiscal Tightening

  • Job growth in the Dallas-Fort Worth metroplex through the 12 months ending in December was strong, up 2.5 percent compared with the U.S. average of 1.6 percent. As a result, the area’s unemployment rate is falling faster than the national average. The metro area posted a 5.9 percent unemployment rate in December, well below the U.S. average of 7.8 percent for that month. Recent increases in federal taxes will be a drag on consumer spending in North Texas, but strong job and reviving property markets will keep consumers engaged. Further fiscal tightening is expected in the form of cuts to federal defense and non-defense discretionary spending.
  • Fort Worth-based American Airlines has finalized its merger deal with Tempe, Arizona-based U.S. Airways. The $11 billion deal creates the biggest U.S. airline by traffic, retaining the American Airlines nameplate. Corporate headquarters will remain in Fort Worth, but the area could lose some redundant operations. Prior to the merger American operated hubs in Dallas-Fort Worth, Miami, Chicago, New York and Los Angeles. US Airways operated hubs in Philadelphia, Charlotte, Phoenix and Miami.
  • Expected cuts to U.S. defense spending have the potential to reduce orders for Lockheed Martin’s F-35 Joint Strike Fighter. The Air Force has signaled its intention to reduce orders for the aircraft if the Federal spending sequester kicks in. The aircraft is also targeted for international sales which may be vulnerable if the U.S. cuts back. 
  • The price for West Texas intermediate crude oil increased from mid-December through the end of January, recently stabilizing near 97 dollars per barrel. The expansion of the Seaway pipeline which transports crude oil from Cushing, Oklahoma to Texas Gulf Coast refiners narrowed the spread between WTI and Brent and will result in lower prices at the gasoline pump in the months ahead. The oil rig count in Texas has eased slightly off its mid-2012 highs while the gas rig count has stabilized after sliding through 2012.

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Click here for the complete North Texas Regional Economic Update: NorthTexas 2013Q1.

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