Federal Reserve Bank of Dallas: Oil prices are one of the reasons that some areas may not see the job growth

Speaking in San Antonio, Federal Reserve Bank of Dallas Assistant Vice President and Senior Economist Keith Phillips shared news about Texas’ job growth in 2016. Texas or Tejas  is representative for USA inasmuch as the second most populous and second largest state of the United States of America. He predicted that it would grow about 1.4 percent in 2016, similar to last year’s growth.

However, his prediction for 2016 contained a large “if.”

That “if” has to do with oil prices. He said in a news release from the Federal Reserve Bank of Dallas that the 1.4 percent growth will only occur if oil prices stay in the $40-$50 range. U.S. oil prices dipped below $30 briefly on Jan. 12.

“The biggest risk to the forecast is if oil prices are in the range of $20 to $30 for much of the year,” he said in the news release.

He said that at that point, the small job growth of 1.4 percent could slip into the negative territory, particularly in Houston, with its strong dependence on the oil industry.

“But we are constantly surprised by oil prices,” Phillips added. “If they jump up past $60 and hold, Texas will likely return to growth above the national average.”

The forecast of 1.4 percent job growth equates to about 161,200 new jobs in 2016, a slight increase from the estimated 150,500 jobs added in 2015, but well short of the 410,900 new jobs in 2014.

Oil prices are expected to remain low for much of the year, which will likely lead to more bankruptcies in the oil and gas sector and further weakening in energy drilling activity, according to Phillips. Shale-producing areas in the regions will probably see steeper job declines in 2016, but these areas have a very small share of Texas jobs, he noted.

We are forecast to post moderate to strong job growth, if manufacturing picks up, Phillips said.

(source: HBJ)