Texas Benefits from Stabilizing Energy Market
2019 will be another good year for the Texas economy characterized by organic growth, ongoing in-migration of both businesses and people, and stability in energy markets. 2019 state real GDP growth is forecasted to be a little stronger than 2018, however, the pattern is different. State GDP growth in 2018 got off to a relatively modest start in the first quarter and then improved rapidly as oil prices increased through the first nine months of the year. Oil prices reset in 2018Q4 and some energy companies reduced capital spending plans for 2019. In 2019 we expect state economic growth to moderate in the second half of the year as U.S. and global conditions cool. We look for oil markets to gradually tighten this year, but a cooler global economy will keep demand growth in check pushing the year-end price for WTI up to about $60 per barrel. At that price, production will remain strong and pipeline and other energy infrastructure projects will continue to support state economic growth. Non-energy businesses will continue to find Texas a favorable location. Apple announced that they will build a new $1 billion campus in North Austin, adding 5,000 employees to the 6,200 that they already employ in Austin. Dallas will also continue to expand as an IT hub, benefitting from being a large business-friendly location. Houston endured the back-to-back blows of a collapsing energy market in 2015 and a devasting hurricane in 2017 to post renewed strong job growth in 2018, averaging 9,300 net new jobs per month for the year. We expect job growth in Houston to ease in 2019 but remain a significant positive force for the state.
For a PDF version of this report, click here: February 2019 Texas Economic Outlook
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