Dallas Fed: Energy Will Drag Down Texas Economy This Year
Speaking in San Antonio at an event hosted by the Federal Reserve Bank of Dallas last week, economist Keith Phillips said he expects the Texas economy to again be stronger than the nation’s in 2020.
That’s despite job losses in the oil and gas industry.
“Overall, I expect the energy sector to be a slightly negative drag on the state,” he said. “But generally mostly neutral in terms of growth from last year to growth to this year.”
Phillips said the good news is that the U.S. economy is strong, and it’s expected to continue to grow this year.
“Texas is more dependent on the national economy than it is on oil prices,” he said. “But when oil prices swing it affects our relative performance to the U.S. economy.”
Historically low unemployment means a tight labor market, which means there isn’t much room for job growth, he said.
“Last year, we had 2%, my model says 2.1% – pretty much the same as last year,” Phillips said.
He said some risks to the forecast are a sharp decline in oil prices, an escalation of the trade war and a national recession.
The United States is currently in its longest expansion on record.
“Once you get into this type of length, people begin to get worried that the good times have to end pretty soon,” Phillips said.
Still, he said, forecasters don’t expect a recession to happen this year.