Federal Reserve Bank of Dallas Senior Economist and Research Officer, Keith Phillips, projects Texas should add 235,000 to 295,000 new jobs in 2015.
The growth represents about a 2 to 2.5 percent increase in jobs, but lower than 2014 employment growth at about 3.6 percent.
Although the job outlook is still decent and trending in the right direction, part of the decline from 2014 is due to the drastic change in crude oil prices.
Today WTI crude oil opens trading at $46 a barrel, which is 54 percent lower than its 52 week high last year in June, closing at $101 a barrel.
Phillips presented the economic data as part of his Texas Economic Outlook at San Antonio’s Federal Reserve location.
Philips states, “The sharp decline in oil prices has created much uncertainty in our outlook for state job growth this year, but we’re viewing it as a headwind for the Texas economy. However, Texas has a diversified economy, and while the drop in oil prices slows job growth, it won’t send the state into a recession like it did in the 1980s.”
Regions dependent on oil production, such as the Permian Basin and the Eagle Ford Shale, will sharply cut drilling if crude prices continue to trade at $50 a barrel or less, according to Philips. Houston will also experience a drop in oil jobs as well if prices stay at or below $50 a barrel. However, Philips states employment growth will remain positive for 2015.
Yesterday Goldman Sachs reduced its six-month WTI predictions by half, to $39 a barrel from $75, and for 12 months to $65 from $80 a barrel. Read more…
Goldman suggests the market needs a prolonged lower crude oil price of around $42 a barrel so the market demand and supply can reach an equilibrium, and finally stabilize.