The Texas economy is expected to continue to grow in 2019, but at about half of the pace of the robust growth seen last year, the Chief Economist of the Federal Reserve Bank of Dallas told San Antonio business leaders, News Radio 1200 WOAI reports.
Keith Phillips said one of the biggest barriers to continued growth is a lack of workers.
"Not enough workers are around, and employers are constantly trying to figure out how to do more with fewer workers," Phillips told the audience at the Federal Reserve offices downtown.
In 2018, the Texas economy added 293,000 new jobs for a 2.4% annual growth rate, outpacing the strong growth in the U.S. economy.
Phillips is predicting a 1.4% growth rate in 2019, with is still strong growth, but significantly less than last year.He says the Texas economy is now beyond full employment, with the lowest unemployment rate since the 1960s.
"I would expect some slowing this year to about one and half percent," he said. "The Texas unemployment rate is going to remain near historic lows, it may tick up a little bit. We are at 2.7 now, it may end the year somewhere between 2.7% and 3%, I think."
That is still well below the level that economists consider 'full employment.' That takes into consideration the number of people who are voluntarily between jobs, on a sabbatical, or on maternity or family leave, who are counted as unemployed but who are still working.
But Phillips says there are not insignificant risks to the Texas economy in 2019. First and foremost is the uncertainty about the price of oil.
"Surveys suggest a weakening of growth in the energy sector," he said. "It does not yet reflect a decline in the energy sector, but if energy doesn't grow as much as last year, that puts a dampening effect of overall job growth in the state."
But Phillips said the increasing diversification of the Texas economy will be able to blunt some energy job losses far more than in the 2015 oil price downtown, or oil price slumps in the late 1980s, which led to the savings and loan crisis.
Phillips also cited the possibility of tariffs and trade wars becoming more significant in 2019.
Texas is the largest exporting state in the country by far, and as such stands to be harmed by anything that cuts into international trade.