When he was making one of his frequent stops in Iowa last week, former Texas governor Rick Perry (R) talked up his job creation bona fides, as he's done often in the past. We looked at this last month; none of the governors running for president had a better track record on job growth during their tenures. When Perry came into office, 9.3 million Texans were working. Last December, that figure was up to 11.8 million. The numbers are even better compared to the national change.
On Monday morning, though, the Dallas Federal Reserve tweeted this:
The "Leading Index" includes eight metrics the Fed uses to forecast the state's economy. Two of those metrics -- oil price and well permits -- relate to the state's huge oil and gas sector. As the number of people working in Texas has increased, so has the number of people working in the oil and gas industry.
Just shy of one out of every 100 Texans worked in the industry last year. So if the oil industry starts to flag, that's bad news for the Texas economy -- and, by extension, for Rick Perry. And it may be starting to flag.
"Oil at $50 per barrel is painful," one machinery manufacturer told the Federal Reserve in response to its economic survey. "We laid off 25 percent of our workforce to match labor with demand." Another wrote, "The oil price is driving down drilling activity in North America, and our business is strongly correlated to the number of active drilling rigs. We have a tough couple of quarters ahead."
Those are only anecdotal, but it's clear that lower gas prices are significantly affecting what's happening on the ground in the state. The low gas prices Americans are seeing are a function of cheaper oil prices. Those cheaper oil prices mean that the cost of oil extraction isn't always worth it. Last February, there were 850 rigs operating in the state, according to Baker Hughes. Last week, the figure was down to 576.
Texas' economy is bigger than just oil, of course. Other problems cited include the port slowdown on the West Coast, the high value of the dollar, and health insurance costs. New orders were down in the state to -12.2, the lowest figure since 2009. General business activity was down to -11.2.
If Texas' economy stumbles significantly, it's not clear how much Perry, who left office last month, will bear the blame. President Bush absorbed much of the blame from the national collapse, the worst effects of which peaked under President Obama. But that collapse clearly started in 2008. If the number of people working in Texas drops sharply, there's no doubt it will become a counterpoint on the campaign trail.
But the Dallas Fed showed a hint of optimism in another tweet.
Gas prices are headed back up. For Texas (and for Perry), that's good economic news.
Philip Bump writes about politics for The Fix. He is based in New York City.
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