With the possible exception of retail, which continues to struggle under the weight of the 'Amazon effect,' and new car sales, which are depressed nationwide, the Texas economy is performing surprisingly well in 2017. Keith Phillips, the Senior Economist for the Federal Reserve Bank of Dallas, told the San Antonio Manufacturers Association, News Radio 1200 WOAI reports.
Phillips says the twin factors of a rebound in global oil prices and the weaker U.S. dollar, which boosts exports, have combined to benefit several sectors of the state's economy.
"The energy industry and the manufacturing sector have both come back stronger than expected," Phillips said. "So the Texas economy, in terms of job growth, is now the fourth fastest state in the nation."
That follows a weak 2016 where, for the first time this century, Texas underperformed the nation in job creation, due largely to low oil prices.
Phillips says Texas job creation in 2017 will be far stronger than the Fed estimated in January.
"I expect job growth to finish 2.7 percent job growth, following just 1.2 percent last year," he said. "A significant pickup in job growth."
Phillips cited stronger exports boosting manufacturers, and strength in the service sector, as well as in health care. Despite the struggles of retail, the service sector, which includes everybody from teachers to auto mechanics, is showing strength in Texas.
Phillips says the downturn in energy prices in the past 12 months had a positive side to the state's economy, because it encouraged growth in petroleum related areas like petrochemials, which continue to grow, as well as boosting manufacturing. The availability of low cost, locally produced energy is one of the major factors boosting Texas manufacturing.
Phillips said one of the biggest long term challenges for the Texas economy is a lack of workers, as Baby Boomers retire. He says the lack of workers will spawn one of two developments. It could help further increase wages, which have already begun to rise in Texas, and it could also lead to far widespread use of robotics and automation.