Writer: Jerrica DuBois
2 min read January 2023 — Despite the pandemic’s impact on the economy, the Dallas-Fort Worth region enjoyed a rather quick road to recovery in comparison to other metro areas in the U.S. Now, with the looming possibility of recession, DFW is gearing up to clear yet another economic hurdle.
“You must build a fortress-like balance sheet to withstand the economic headwinds that inevitably follow economic tailwinds,” Aaron Graft, vice chairman and CEO of TBK Bank, SSB, told Invest:.
That buildup wasn’t too bad in the metroplex. Nonfarm employment grew 6% in 2021, more than making up for the losses downtown experienced in 2020. The state was also on pace to grow jobs by 3.5%, which translates into adding 452,000 positions statewide, according to projections by the Federal Reserve Bank of Dallas. The official Texas Economic Outlook for 2023 is set to be released on Feb. 3.
The job growth rate for Texas still surpasses the nation’s, and would be two-thirds higher than the state’s average growth since 2010. However, a recession would mean a slowdown in growth and the Lone Star state would add jobs at a slower pace than 2.1%, the average annual growth rate since 2010.
The biggest contributor to job growth in Texas has been the oil and gas industry. In the 12 month span that ended in November, over 42,000 jobs were added in the mining and logging industry, which includes oil and gas. Other areas of potential growth next year include public education and healthcare.
Despite these challenges, Texas is expected to continue to be a popular destination for those relocating. The state’s affordability remains a major strength, especially compared with California and New York. The DFW is the fastest-growing metro in the U.S., and according to real estate agency JLL, the number of residents could increase by 3.4 million by 2045. The metroplex also surpassed New York City and Los Angeles in percentage of jobs added, although it is smaller than those metro areas. According to JLL’s latest DFW Resiliency report, L.A. and New York experienced a 4.3% job growth, while Dallas-Fort Worth was at 6.5%.
Another key to the strength of the economy in DFW is industry diversity. The wide variety of job sectors helps the DFW economy maintain its strength and withstand declines if select industries should take a hit. Trade, transportation and utilities made up over 20% of the region’s employment, and more than 18% consisted of professional and business services. Other major job sectors include education and health services, government, leisure and hospitality and financial activities.
DFW appears to be positioned to withstand the looming challenges thanks to consistent job growth, wide range of employment industries and proven resiliency in past downturns, recovering quicker than cities including New York City, Austin and Houston.
Business leaders in the Lone Star state are also confident in themselves, with 57% of midsize businesses expecting their profits to increase this year, and 66% expecting their revenue to increase. Among small business owners, 63% surveyed expect profit to increase, and 67% expect revenue to increase.
“You lose control of your future by getting yourself in a position where you can’t weather a recession,” Graft told Invest:. “It is highly likely in the next three to five years that the U.S. will experience a recession. I doubt it will look like it did during the financial crisis of 2008, but it could be very real.”
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