Texas

‘Economy on fire’: Texas will create 650,000 jobs statewide in 2022 |

Texas added 650,100 jobs in 2022, more than any other state and more than double its historical average as the economy continued to expand and weather the pandemic hangover. Texas jobs grew 5%, a growth rate that led all states and slightly outperformed the 3% job growth for the nation, according to data from the US Bureau of Labor Statistics released Tuesday. “The Texas economy was on fire in 2022,” said William Adams, chief economist at Comerica Bank. “And the job growth numbers really reflect the amazing momentum that’s happening in our state.” In much of the country, potential growth is limited by labor shortages. But Texas has attracted workers from other states and countries, allowing the labor force to continue growing: “As a magnet, Texas has the ability to pull ahead of the rest of the country that’s facing this (labor) bottleneck,” Adams said . The Dallas-Fort Worth region grew even faster than the state — 5.9% for the year. That was the fastest growth rate among major metros, the Texas Workforce Commission said. North Texas posted a seasonally adjusted net increase of 235,200 jobs last year. That’s more than double the average profit in the years leading up to the pandemic. It nearly equaled the region’s total in 2021 as the economy recovered from losing over 100,000 jobs in the first year of COVID-19. For perspective, consider that Dallas-Fort Worth added more jobs last year than 46 states — and accounted for 36% of Texas’ net income. “There is a virtuoso cycle of economic growth happening in our metropolitan area,” Adams said. That growth attracts more businesses, which creates more jobs, attracts more workers, fuels population growth — and contributes to a booming consumer market, he said: “Growth fuels growth.” Ray Perryman, a Waco economist who has followed Texas trends for over 40 years, cited several factors in the state’s impressive run, starting with internal migration. People have been moving to Texas and other places in the Sun Belt for decades, and this trend accelerated during the pandemic and continued during the recovery. “Many of these individuals are highly skilled professionals who are helping to fill labor shortages and enable future profits,” Perryman wrote in an email. The Texas oil and gas industry has provided significant momentum to the economy, especially after Russia invaded Ukraine in February 2022. The state has about 100 more rigs operational than it did a year ago, Perryman said, and the impact is lifting industries and locations the level and along the production chain. The Texas mining and logging sector, which includes the oil and gas business, added over 40,000 jobs last year. That’s an annual increase of 21% – four times the state’s growth rate. Leisure and hospitality, one of the segments hardest hit by the pandemic, added over 155,000 jobs last year, more than any other. The sector, which includes healthcare, which has been lagging behind, added over 100,000 jobs. Perryman likes to tout Texas’ influence, pointing out that the state has been responsible for more than half of the net gains in total US employment since the pandemic: “That’s pretty remarkable,” he said. Last year’s sky-high numbers could well be revised down after the Bureau of Labor Statistics assesses totals over the next few months. The Federal Reserve Bank of Dallas, which has its own methodology for benchmarking and adjusting jobs estimates, revised Texas growth sharply lower last month. In mid-December, the Dallas Fed forecast that Texas job growth would be 3.5% in 2022, well below the BLS’ current estimate of 5%. That means a difference of over 100,000 jobs. “Benchmarking will likely mean that those numbers will be slightly smaller,” said Daniel Oney, research economist at Texas A&M’s Texas Real Estate Research Center. “Job growth will certainly be very strong, but that will dampen things somewhat into 2023.” Remote working has made it difficult to count specific employees for a specific geographic area, he said, and that contributes to wider variability, according to survey estimates with census results were compared. Oney isn’t concerned about the threat of a broader recession as it will likely be short-lived and Texas is likely to retain a comparative advantage. “What concerns me are things like the office [real estate] market where you have a lot of debt that needs to be overrun and refinanced,” he said. That will result in sticker shock as companies adjust lending to higher interest rates, a process that will repeat itself for other investors. “It’s not the end of the world, but it could lead to a worse recession,” Oney said. Most economists are expecting a significant slowdown in Texas job growth due to both the nationwide headwinds and the rapid pace of the past two years. Adams and Perryman, for example, said Texas jobs would grow about 2% this year. “Our prediction is that a big theme for 2023 will be moderation — both nationally and in Texas,” said Mallory Vachon, senior economist at LaborIQ by ThinkWhy, a Dallas-based company that tracks jobs and wages. Record hiring, high turnover and strong wage growth are likely to ease and more layoffs are on the horizon. “We expect a slowdown, but we don’t yet know if that means a recession,” she wrote in an email. The slowdown will particularly hit companies that have benefited from rapid growth in Texas. “Sectors like recruitment, real estate, finance and construction could all face deeper job losses,” Vachon wrote. Adams, Comerica’s economist, thinks a recession is more likely than not in the coming quarters. Higher interest rates will slow the housing market and prompt consumers to withdraw discretionary spending. “But this is a cyclical story,” Adams said. “The trend story in Texas and D-FW is much stronger.” ©2023 The Dallas Morning News. Distributed by Tribune Content Agency, LLC.

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