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Eagle Ford Shale Has Major Impact on Area Jobs, Income and Spending, According to Dallas Fedâ??s Southwest Economy

Eagle Ford Shale Has Major Impact on Area Jobs, Income and Spending, According to Dallas Fed’s Southwest Economy

Eagle Ford oil boom has resulted in net job growth of more than 15,000 since 2010
in 23-county area, Dallas Fed finds

For immediate release: May 24, 2012

DALLAS—The latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy includes articles on Texas’ Eagle Ford Shale, Mexico’s economy and self-employed workers.

Find the second quarter 2012 issue at:
http://www.dallasfed.org/research/swe/index.cfm

The oil boom in the Eagle Ford Shale in South Texas has had a profound impact on jobs, income and spending in the region, according to Robert W. Gilmer, Raúl Hernandez and Keith R. Phillips in “Oil Boom in Eagle Ford Shale Brings New Wealth to South Texas.”

Generally, the 23 Eagle Ford counties account for 2 percent of all Texas jobs, the authors say. Since the beginning of 2010, however, there have been 15,773 net jobs created in those counties, accounting for 6.9 percent of the state’s net gain during the period.

Wages have grown markedly in the Eagle Ford counties, the authors find. From first quarter 2010 to third quarter 2011, the area experienced an average annualized growth rate in weekly wages of 14.6 percent.

Seasonally adjusted retail sales growth in Eagle Ford counties also has been strong, with a 15.4 percent annual increase from first quarter 2010 to third quarter 2011, the authors state.

It is difficult to predict how energy drilling activity will change in the Eagle Ford area over the coming years, but if oil prices stay above $70 per barrel, drilling activity in the Eagle Ford area should remain strong, according to the authors.

“The billions of dollars the large energy companies are committing to expand infrastructure for delivering hydrocarbons to the Texas Gulf Coast signal anticipation of strong production from this region for many years to come,” the authors write.

Gilmer is a senior economist and vice president at the Dallas Fed. Hernandez is an intern in the Bank’s San Antonio Branch, and Phillips is a senior economic policy advisor at the San Antonio Branch.

In “Mexico Resilient in 2011 Amid Global Uncertainty and Sluggish U.S. Growth,” associate economist Jesus Cañas says there is great potential for the Mexican economy to exceed the consensus forecast of 3.4 percent in 2012.

Mexico’s economy grew at 3.9 percent in 2011, overcoming European financial tensions, sluggish U.S. growth and global supply-chain disruptions related to Japan’s natural disasters, according to Cañas.

“Even though Mexico has yet to address many areas of vulnerability, solid macroeconomic fundamentals have allowed the country to successfully navigate another wave of global volatility, proving to the international community that it is well-fortified to withstand further external shocks,” Cañas writes.

In 2012, forecasts for faster growth in the U.S., strong industrial production in Mexico and an increase in auto and light-truck sales are positive signs for Mexico’s economic growth, Cañas notes.

Risks to growth remain, however, including a potential global economic slowdown or drop in oil prices, as well as growing political uncertainty due to Mexico’s presidential election in July, Cañas states.

In “Self-Employment an Option for Workers Who Lose Jobs in Economic Slowdowns,” senior research economist and advisor Anil Kumar and economic writer/editor Michael Weiss find that unincorporated, self-employed workers—at an average age of 48 in 2011—tend to be six years older than other workers.

“Should heightened self-employment—particularly among older workers—become an enduring feature of the postrecession economy, programs based on traditional employerâ??employee relationships will remain relevant but may need to be redrawn to accommodate the new realities that are emerging,” Kumar and Weiss write.

This issue of Southwest Economy also features an “On the Record” conversation with the Atlanta Fed research economist Julie Hotchkiss and a “Spotlight” article on new energy drilling techniques in the Permian Basin.

 

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Media contact:
Alexander Johnson
Phone: (214) 922-5288
e-mail: alexander.johnson@dal.frb.org

 

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