Is Finance The Next Big Money-Maker In Texas?
When oil prices steadily collapsed back in 2014, many feared for the state of Texas’ economy. This is the story that many economists have been talking about for months on end lately. During the 1980s, a similar issue took place that rocked the local economy as well. The banks were shuttered, many businesses began to crumble and the whole state of Texas was going down the drain.
This Time Around…
Funny enough this time around, even with the economic downturn in the oil prices, the state kept on sailing through and ended up with a record low for unemployment just a few short years later. They also saw a lead in the nation for job growth in the same time frame as well.
A new report was recently released by the Federal Reserve Bank Of Dallas. They looked thoroughly at the financial services of many business and professional service jobs to determine their role in the state’s economy. This raised a lot of new questions.
Ripple Effect Or A Swaying Boat?
In order to determine what factors affect the economic state of Texas, it can help to try and understand what industries are the boats holding strong during high currents and which ones are the ripples in the water.
As an example, there are many industries which interact with the state’s financial sector. When the financial sector gets hit hard, more jobs are affected because of this than with any other industries because of the amount of jobs the sector supplies.
Another result from the research suggested that while the white collar service sectors typically cause the bigger ripple effects in the overall economy in Texas, gas and oil sectors are still very important.
The Anatomy Of A Bust
Many were trying to find out why it was so worrying to see the prices of oil crashing just a few short years ago. Historically, big shocks to the gas and oil industries can spill over into many other industries as a result.
When Texas decided to diversify their economy a little more in the 90s and 2000s, there was a smaller instance of spillover from shocks to the gas and oil industries. While there have been many spillovers since that time, they have all had a much smaller impact on other sectors in recent years.
Growth Of Service Jobs
Many business leaders throughout Texas believe that their hard work to recruit more jobs in the corporate sector, many of which are in the business and financial services, has played a major role in why the economy of the state is less affected by the imminent ripple effects when gas and oil crashes happen.
However, since the last recession happened, research has proven that the spillover from various financial activities has steadily climbed. This means that the economy of Texas is becoming more aligned with the economy of the nation as a whole, for better or for worse.
In spite of the changes in how the economy of Texas is being influenced, there are reports stating that gas and oil still have a very strong influence throughout all sectors. This is even true with how many people overall actually work in the industry.
In terms of overall employment in Texas, the top three sectors include the government, retail and wholesale trade and the professional and business services sectors. Beyond those you will find health services, hospitality and leisure, non-oil manufacturing, financial activities, transportation and construction.
At the very bottom of the list you will find gas and upstream oil, information, educational services and the oil-related manufacturing sectors.
Thoughts From Staff Writer Of The Dallas Morning News
Jill Cowan is a staff writer for the Dallas Morning News company. She has spoken to many credit economists about the state of the economy in Texas. She has been hearing a lot recently about the changes coming. She believes that is could be a really great thing for Texas to continue to diversify their economic activities.
However, she is also very curious about what the diversification could actually mean for the future of the state of Texas. The changes could prove to be a great thing. They could also mean an economic downturn that the state is not necessarily ready for.
According to the senior vice president of the Federal Reserve Bank of Dallas, Mine Yucel, there is definitely a higher spillover in Texas’ financial service industry.
She believes that if the state ends up going through another huge financial downturn that the state could be more impacted than they have ever been in the past.