‘Soft Landing’ for Texas Economy, Dallas Fed Forecasts

By Jana J. Pruet
Jana J. Pruet
Jana J. Pruet
Jana is an award-winning investigative journalist. She covers news in Texas with a focus on politics, energy, and crime. Jana has reported for many media outlets over the years, including Reuters, The Dallas Morning News, and TheBlaze, among others. She has a journalism degree from Southern Methodist University. Send your story ideas to: jana.pruet@epochtimes.us
February 6, 2023Updated: February 6, 2023

The Texas economy is expected to make a “soft landing” this year, according to the Federal Reserve Bank of Dallas.

Job increases are slowing. The bank expects jobs to grow by 1.4 percent this year, significantly lower than last year’s 3.5 percent job growth and below the state’s annual 2 percent trend.

“That is consistent with a soft landing for Texas,” said Dallas Federal Reserve Bank Vice President and Senior Economist Pia Orrenius on Friday during a webcast on the Texas Economy.

A recession in Texas is not predicted.

“The Texas economy is forecast to grow more slowly this year and likely below trend, but we’re not predicting it to contract,” Orrenius continued.

The U.S. Bureau of Labor Statistics reported 650,100 jobs were added in Texas last year. It is expected to revise the report after making seasonal adjustments.

The Dallas Fed report showed that the state added 452,000 jobs and ended the year with 13.5 million employed, with broad-based gains across all sectors, according to the Dallas Fed. The Fed data has been benchmarked and seasonally adjusted.

The energy sector saw the highest gains at 12.7 percent, followed by leisure and hospitality at 7.1 percent and professional business services at 6.4 percent.

The Texas rig count has been trending up with oil prices, which is a positive for the state, but the increases are not as high as would have been expected five or 10 years ago, according to Orrenius.

“We can’t expect the boost from the energy sector today as we would have years ago in Texas,” Orrenius said.

Geographically, Austin outperformed the rest of the state with 4.2 percent job growth, although hiring slowed dramatically in the high-tech sector at the end of the year.

Houston followed Austin with the bulk of its growth in the energy sector.

This year, Texas employers are expected to create 193,000 new jobs reaching employment of 13.7 million at the end of the year.

Home Sales, Prices

Higher interest rates have cooled the Texas housing market, and home prices are dropping.

On Feb. 1, the Fed hiked the interest rate by 0.25 percentage points, bumping the federal rates to a target range of 4.5 to 4.75 percent. It was the eighth consecutive increase since last March.

Austin has seen the greatest decline at about 9 percent from its peak, followed by Dallas.

“I think there is room for a continued normalization of housing markets,” Orrenius said, adding that the majority of homeowners still have a lot of equity in their homes.

Bankers are reporting decreased volumes of consumer lending and an increase in consumer loan delinquencies in low-income areas.

Looking Ahead

The Fed’s rate hikes are meant to slow the economy in order to temper inflation.

“The summary is that the Fed’s speed bumps are having the intended effect,” Orrenius explained. “Although again, with the caveat of the disappointing jobs report, perhaps.

“The speed bumps are working,” she added.