North Texas Still Expanding, But Feeling Energy Drag

The North Texas economy continues to expand at a moderating rate. Labor market data has changed after strong and steady gains through 2014. In 2015, the steadiness gave way to choppiness. The peak months of job gains in 2015 were actually higher than in 2014. However, peak months were often followed by weak months or losses, as was the case in March and May. Year-over-year job growth has shifted down from a peak of 4.4 percent in January 2015, to 3.0 percent in December 2015. Unemployment in the metro area bottomed out at 3.7 percent in August of last year, and then increased to 4.1 percent by December, still well below the U.S. average of 5.0 percent for December. So we can say that conditions are changing. We expect to see slower overall job growth through most of 2016. Also, we can see a separation in performance between the eastern and western halves of the metro area. In the Dallas-Plano-Irving metropolitan division, year-over-year employment growth in December was a strong 3.6 percent. In the Forth Worth-Arlington metro division, year-over-year job growth in December has dipped to 1.4 percent, below the U.S. average of 2.0 percent for the month. The unemployment rate for the two halves of the metro were indistinguishable through 2014. Now we see the Forth Worth metro division higher at 4.3 percent, while the Dallas metro division showed 4.1 percent unemployment in December. With large transplant employers still staffing up in North Texas, we expect to see ongoing support for moderate-to-weak job growth for the rest of this year.

The collapse in oil prices to below $30/barrel has pulled the wind from the sails of the Texas economy. This year, areas that are economically diverse will outperform areas that are concentrated in oil and gas production. Most Texans will notice a cooler overall state economy this year. We assume that oil prices will increase to $45 per barrel by year-end. A lower price track would imply even cooler economic conditions for the state.

North Texas 2016Q1

 Click here for the complete North Texas Regional Economic Update: NorthTexas 2016Q1.

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