Texas Could Be Headed for an Oil-Fueled Recession

“As we weigh the evidence, we think Texas will, at the least, have a rough 2015 ahead, and is at risk of slipping into a regional recession,” Michael Feroli,  J.P. Morgan Chase’s chief U.S. economist, said in a note to clients.

Texas has seen strong growth in recent years, outpacing the U.S. recovery in part thanks to a boom in domestic oil production. The state’s unemployment rate in October was 5.1%, below the national rate of 5.8%, according to the Labor Department. Gross domestic product in Texas expanded 6.9% in 2012 and 3.7% in 2013, beating national GDP growth of 2.5% and 1.8% respectively, according to the Commerce Department.

Any downturn wouldn't be a classic business cycle decline, as the Fed continues to aggressively pump money into the overall economy (SEE: The EPJ Daily Alert), but the oil drop is going to be some kind of problem for Texas---and even more so for Wyoming and North Dakota, which have economies that are much less diversified than Texas and have been booming largely because of oil production.

(via WSJ)