On August 7, 2015, the Federal Reserve Bank of Dallas held a one day conference entitled, “Vistas from Texas: An Economic Outlook.” The conference was a part of the Sizing Up Texas’ Growth Conference Series. The series focuses on Texas’ economic growth that has been largely supported by the energy sector and the sustainability of that growth with the downturn in energy prices.
The Dallas Federal Reserve Director of Research, Mine Yucel, predicted that eight oil and gas economically dependent states have a poor economic outlook due to low oil and gas prices. Texas, Alaska, Oklahoma, Louisiana, Wyoming, West Virginia, New Mexico, and North Dakota make up the eight oil and gas dependent states. Yucel believes that Texas will avoid a recession because of its economic diversification and its continued ability to attract new jobs and residents. The other oil and gas dependent states are not predicted to weather the economic storm as well.
Yucel believes that North Dakota will be hardest hit with job losses. Last year, North Dakota was number one in the nation in job growth. Yucel predicts that this year North Dakota will be last in job growth. She also believes that the other oil and gas dependent states will have to reduce spending due to the smaller severance tax revenue. She especially believes that Alaska will be adversely affected because so much of its revenue is dependent upon oil. Yucel definitively said that there will not be a recession in Texas.
Federal Reserve economists stated that energy booms have proved to be highly beneficial to the overall U.S. economy. The economists believe that the current boon’s contribution to low gasoline prices could contribute between .3 and 1 percent to GDP growth. Still overall GDP growth is predicted to be 2.3 percent.
Written by Stephen Kenney - Research Assistant
Center for Agricultural and Shale Law
August 8, 2015