Your Texas Economy

Last updated: February 17, 2017

OverviewEconomy picked up this year after slow growth in 2015

2016 job growth was 1.4% 2015 job growth was 1.3%, weak due to the oil bust 2014 job growth was 3.7%, strong due to the oil boom

Growth accelerated in the second half of 2016 relative to the first half Job growth edged down to 1.7% in Q4, from 2.3% in Q3 Dallas Fed forecasts Q1 2017 job growth to be 1.8%, with total 2017 job

growth forecasted at 1.9%

2

Slightly Strong Texas Job Growth in 2016

1.41.6

-5-4-3-2-1012345

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Job growth (percent)*

TX

*Seasonally adjusted, annualized rate.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tae000000.aspx

U.S.

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Quarterly Data Show Stronger Second Half

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2014 2015 2016*Seasonally adjusted, annualized rate.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tae000000.aspx

Job growth (percent), quarter/quarter*

2014 2015 2016

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Growing Service Sector Buoyed Texas

-30-25-20-15-10-505

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Trade,Transp.& Util.

(20.1%)

Educ. &Health Serv.

(13.8%)

Prof. & Bus.Serv.

(13.6%)

Leisure &Hosp. (10.8%)

Manufacturing(7%)

Fin. Act.(6.1%)

Constr.(5.8%)

Oil & GasExtract.,

Mining Sup.(1.7%)

2015 2016

*Seasonally adjusted, annualized rate.NOTES: Numbers in parentheses are share of state employment accounted for by each sector.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tx-emp-ind.aspx

Job growth (percent)*

5

Job Growth Uneven Across Metros

*Seasonally adjusted, annualized rate.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; seasonal and other adjustments by FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/tx-emp.aspx#tab3

-1

0

1

2

3

4

5

Austin Houston San Antonio Dallas Ft. Worth

201420152016

Job growth (percent)*

6

TX Unemployment Rate Edging Down Again

0

2

4

6

8

10

12

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

U.S.

Texas

4.6

4.7

Unemployment rate (percent)*

NOTE: Data through December 2016.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; FRB Dallas.DATA: https://www.dallasfed.org/research/econdata/txu.aspx

7

Job Outlook: Modest Growth

*Seasonally adjusted.NOTES: Data through December 2016. Upper and lower dashed lines represent the 80 percent confidence bands around the forecast.SOURCES: Bureau of Labor Statistics; Texas Workforce Commission; FRB Dallas.DATA: http://www.dallasfed.org/research/forecast/index.cfm

9

10

11

12

13

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Jobs (millions)* Dallas Fed

Employment Forecast

Texas job growth expected to be about

1.9% this year

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ENERGY

Texas is #1 producer of oil and natural gas in nation

25% of U.S. refinery capacity and 60% of U.S. petrochemical production is in Texas

Low energy prices hurt Texas economy on net

Energy Activity Has Bottomed Out

0

100

200

300

400

500

600

700

800

900

1000

0

20

40

60

80

100

120

140

160

2000 2002 2004 2006 2008 2010 2012 2014 2016

Dollars Rig CountTexas Rig Count

Oil Price

Natural Gas Price

NOTES: Oil price is dollars per barrel. Natural gas price is dollars per million Btu, multiplied by 10. Data through January 2017.SOURCES: Wall Street Journal; Baker Hughes; U.S. Energy Information Administration; Haver Analytics.

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Manufacturing sector highly correlated with economic growth

Texas produces 10% of U.S. manufactured goods

Dallas Fed’s Texas Manufacturing Outlook Survey offers early look at turning points and insight on trends

MANUFACTURING

-60

-50

-40

-30

-20

-10

0

10

20

30

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Index, 3-month moving average*

ProductionExpansion

Contraction

TexasRecession

Oil Bust

Manufacturing Sector on the Mend

*Seasonally adjusted.NOTE: Data through January 2017.SOURCE: Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey (TMOS).DATA: https://www.dallasfed.org/research/surveys/tmos

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Gulf coast ports are major exporters of oil products and petrochemicals

Texas is the top exporting state and accounts for 17% of U.S. exports

Texas-Mexico border ports also process over half of state exports

EXPORTS

Texas Exports Fall in Energy Bust

0

50

100

150

200

250

300

2000 2002 2004 2006 2008 2010 2012 2014 2016

Index, Jan. 2000=100*

Texas

U.S. minus Texas

*Seasonally adjusted.NOTES: Underlying data in real dollars; data through December 2016. SOURCES: U.S. Census Bureau; Wisertrade; Bureau of Labor Statistics; seasonal and other adjustments by FRB Dallas.

Mexico is Texas’ top trading partner, receiving 42% of state exports

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Petroleum Product Exports Boom, Bust

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1998 2001 2004 2007 2010 2013 2016

Petroleum and Coal ProductsTransportation EquipmentChemicalsComputers and ElectronicsMachinery

Index, Q1:1997=100*

*Seasonally adjusted.NOTES: Underlying data in real dollars; data through Q4 2016.SOURCES: U.S. Census Bureau; Wisertrade; Bureau of Labor Statistics; seasonal and other adjustments by FRB Dallas.

Petroleum & coal products exports account for 16% of Texas exports, second only to computer & electronics at 21%

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Accounts for over 60% of private-sector activity in Texas

Service industry makes up the bulk of the Texas economy

Dallas Fed’s Texas Service Sector Outlook Survey provides timely insight into this key sector

SERVICES

-60-50-40-30-20-10

010203040

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Index, 3-month moving average*Expansion

Contraction

Oil Bust

Service Sector Grows Despite the Bust

Texas Recession Services

Revenue

*Seasonally adjusted.NOTE: Data through January 2017.SOURCE: Federal Reserve Bank of Dallas Texas Service Sector Outlook Survey (TSSOS).DATA: https://www.dallasfed.org/research/surveys/tssos

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-60-50-40-30-20-10

010203040

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Index, 3-month moving average*Expansion

Contraction

Oil Bust

Retail Activity Strengthens

Texas Recession

ServicesRevenue

Retail Sales

*Seasonally adjusted.NOTES: Data through January 2017; the TROS is a component of TSSOS using information only from retail and wholesale sectors.SOURCES: Federal Reserve Bank of Dallas Texas Service Sector Outlook Survey (TSSOS) and Texas Retail Outlook Survey (TROS). DATA: https://www.dallasfed.org/research/surveys/tssos

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HOUSING

Housing sector was slow to recover

Texas avoided the house price bubble

Housing markets currently tight in most of the state

Home Sales High, Inventories Low

0

1

2

3

4

5

6

7

8

9

10,000

15,000

20,000

25,000

30,000

2000 2002 2004 2006 2008 2010 2012 2014 2016

Months in inventory*

Inventory

Home sales

*Seasonally adjusted.NOTE: Data through December 2016.SOURCES: Multiple Listing Service; seasonal and other adjustments by FRB Dallas.

Total existing home sales*

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Texas Median Home Price at Record High

100120140160180200220240260280300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

U.S.

Texas

Metro Area Dec. Price Y/Y % ChangeAustin $287,355 4.1%Dallas $260,891 6.6%Ft.Worth $205,575 9.5%Houston $222,354 1.0%San Antonio $208,212 2.7%

Dollars (thousands), four-month moving average*

*Seasonally adjusted.NOTES: Data in real dollars; data through December 2016.SOURCES: Multiple Listing Service; seasonal and other adjustments by FRB Dallas.

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www.dallasfed.org/research/texas