Texas economy ‘firing on all cylinders,’ says Dallas Fed economist; state projected to add 366,000 jobs in 2018

For Immediate Release: January 9, 2018

SAN ANTONIO—Texas job growth is forecast to strengthen to 3 percent in 2018 from an estimated 2.5 percent in 2017, said Federal Reserve Bank of Dallas assistant vice president and senior economist Keith Phillips today in San Antonio.

“The Texas economy is firing on all cylinders going into 2018,” Phillips said. “If oil prices remain above $40 per barrel, Texas likely will see continued broad-based growth across regions and sectors.”

Phillips presented the Bank’s annual Texas Economic Outlook before local business leaders at the Dallas Fed’s San Antonio Branch.

The forecast of 3 percent job growth means Texas should add about 366,000 new jobs in 2018. Texas added 305,900 jobs in 2017, ranking No. 3 in the nation for job growth after falling below the national average in 2015 and 2016. The pickup was mostly due to a rebound in the energy and manufacturing sectors, Phillips said.

Employment growth broadened across the state’s major metro areas in 2017. Austin and Dallas posted the strongest gains, followed by San Antonio, which saw 3 percent growth in 2017. Houston rebounded from weakness in 2015 and 2016 and Hurricane Harvey only had a temporary impact on job growth.

The state’s unemployment rate fell to 3.8 percent in November—a record low for the series, which dates back to 1976. This increasingly tight labor market could present a headwind to growth in 2018, Phillips said.

“With an unemployment rate at historical lows, the biggest challenge facing the state may be finding enough workers to fill job openings,” he said.

The biggest risks to the forecast, however, would be a sustained drop in oil prices below $40 per barrel or policy changes causing a significant disruption in trade, Phillips said.

The Dallas Fed releases its Texas Employment Forecast on a monthly basis in conjunction with the release of monthly Texas employment data. The forecast projects job growth for the calendar year and is estimated as the 12-month change in payroll employment from December to December. For information on the methodology for the Bank’s Texas Employment Forecast, visit the Dallas Fed’s website.

-30-

Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org