(The Center Square) – Despite a recent Dallas Federal Reserve Bank report claiming Texas’ economic expansion slowed and business outlook weakened last month, Texas broke all employment records in May, reaching highs never before achieved in state history.
It also kept is first place ranking for business 19 years in a row and remains the headquarters of headquarters of Fortune 500 companies in the U.S.
Texas also led the U.S. with the fastest economic expansion last year, with an annual GDP rate of 7%, nearly triple the national rate.
A newly released analysis from Texas Oil & Gas Association Chief Economist Dr. Dean Foreman provides context to the Fed report. It notes, “While an accurate reading of economic statistics, a broader context offers reasons for optimism.”
“What goes up, must generally come down. A slowing expansion is both typical and healthy following periods of rapid expansion,” Foreman said.
Many have criticized the Federal Reserve overall for contributing to increased inflation, much higher interest rates and not preventing large banks from failing. Congressional lawmakers have asked why the Federal Reserve Bank of San Francisco, for example, didn’t prevent major bank failures and why its leaders haven’t been fired.
As federal monitory policy continues to be scrutinized, the state of Texas has a $33 billion surplus this year, the largest in state history, thanks in large part to the Texas oil and natural gas industry paying a record $24.7 billion in state taxes and royalty payments last year. In May, the industry also added more jobs in a single month than it has in over 30 years, also contributing to the state’s record-breaking job growth streak.
“Excluding the post-pandemic rebound, Texas’ past two quarters are the state’s best performance since late 2014 and early 2015 – and Texas ended 2022 with a new record-high state GDP of $1.92 trillion,” the analysis states.
“A detailed look into industry drivers shows that the sources of the state’s strength are even clearer, with Texas’ real GDP achieving a record high of $1.92 trillion in Q4 of 2022, making it the fastest growing state over the second half of 2022,” it says.
The report also points to a Bureau of Economic Analysis which notes that over 70% of real growth in the second half of 2022 was driven by Texas oil and natural gas-related industry segments.
The industry’s direct employment also increased by 8.3% year-over-year to 477,327 in the fourth quarter of 2022, generating $13.8 billion in wages, according to Texas Workforce Commission data.
Recent oil and natural gas expansion also brought significant gains in employment and wages to the state, accounting for a 8.3% increase year over year in job growth and 11% year over year in wage growth in fourth quarter of 2022.
Industry job and wage growth continued despite oil prices remaining near a median price since 2006, adjusting for inflation. This indicates that “Texas has become a relatively more important energy source,” the report notes.
Some suggest that a 7.7% reduced rig count in the last six months could indicate a sign of economic slowdown. But put into context, TXOGA notes, rig counts fell by nearly 24% in Colorado, over 36% in Oklahoma and 15% in Wyoming over the same time period. And Texas by far has the most rigs in operation.
Texas crude production accounts for over 43% of national crude production and 26.5% of its natural gas production.
The U.S. Energy Information Agency also points to continued growth in the west Texas southeast New Mexican Permian Basin, where crude production is expected to increase by 1,000 b/d to hit 5.76 million b/d in July. Natural gas production there is also expected to increase to 22.878 bcf/d.
“These signs of both absolute and relative strength amid broader economic uncertainties are encouraging indicators that Texas oil and gas will drive growth going forward,” Foreman said.
