This time is different, and not by accident. Oil prices have fallen by more than half since last summer, prompting cuts in energy jobs and rig counts. That is stoking fears of a deep downturn in the state’s economy. But Texas is less vulnerable to the kind of oil shock that derailed the state in the 1980s, and that’s by design. Almost 30 years ago, when the oil industry collapse put the state in a fiscal crisis, political and business leaders set out to diversify the economy and its tax base. They launched economic development programs and recruited a wide range of employers, an aggressive approach that’s been refined and copied elsewhere. They expanded the sales tax base to more products and business services. Licenses, fees and the lottery became more important contributors. A rainy day fund was created to siphon off future gains from oil and gas and provide a safety net for the next emergency. Now, the fund has $8.5 billion, and the comptroller projects it will grow to $11 billion in two years. All these initiatives helped diversify the Texas economy and make it less dependent on oil. In 1982, taxes on oil and gas production accounted for almost 18 percent of state revenue. Last year, the share was 5.5 percent. Last week, the comptroller projected 3 percent growth for 2015. That’s down from a 3.7 percent gain in real gross state product last year. He cited the decline in oil prices and possibility of a slowdown in global growth. While the energy business is under pressure, other sectors are growing fast. Local governments, which lost workers for almost two years, have been adding teachers, cops and firefighters at a rapid clip. If he’s right, the state economy will roll on, even as the oil and gas industry pulls back. Decades ago, that’s exactly how Texas leaders envisioned it.
– Dallas Morning News, January 19, 2015
Oil Patch Declines Won’t Stifle U.S. Housing Markets, Analysts Forecast
Top housing economists don’t think an Oil Patch slowdown will result in a weaker national housing market. Nationwide starts of single-family homes are expected to jump by 26 percent, according to the latest forecast from the National Association of Home Builders. Dave Crowe, a top economist, thinks the positive impact of lower energy costs will far outweigh any negatives that the drop in oil prices brings. And even in Texas, the housing analysts predict that any cutbacks from the oil sector shakeout will be concentrated in specific markets. “If the decline in energy values remains for a sustained period of time it will have effects on the Texas economy — not throughout Texas but in parts of Texas,” said Frank Nothaft, chief economist with mortgage giant Freddie Mac. “When you have a drop in energy price that’s sustained, it has the same beneficial impact as a tax cut would,” Nothaft said. “Your average person sees more cash in their pocket at the end of the day.” He is forecasting that overall home sales across the country will rise about 4 percent in 2015. “That will be the best year for home sales since 2007 — the best in eight years,” Nothaft said. “We are expecting home prices to continue to rise in 2015 maybe a nudge lower — 3.5 to 4 percent.” Crowe said a stronger overall economy, more employment gains and an easing of mortgage requirements in 2015 will give the housing recovery more lift.
– Dallas Morning News, January 20, 2015
Texas Added More Residents Than Any Other State
Texas was the third-fastest growing state in the nation over the past year as a percentage but it added more people than any other, according to new state-level population data released by the U.S. Census Bureau Tuesday. Texas grew by 1.7 percent from July 2013 to July 2014, behind Nevada, which grew by 1.71 percent and North Dakota, whose oilfield boom fueled a 2.16 percent growth in its population. Texas remains the No. 2 most-populous state overall, with a population of 26.9 million. That’s behind California’s 38.8 million-strong population but ahead of Florida’s 19.8 million population. Florida surpassed New York to become the 3rd-most-populous state in America. However, Texas did have the largest numeric increase in its population, which rose by 451,321 overall, ahead of California, which added 371,107 new residents last year.
– Austin Business Journal, December 23, 2015