Texas felt the full force of the recession as 2009 rang in according to a Federal Reserve Bank of Dallas economists' report that said the state's unemployment rate could jump to 8 percent as more employers slash jobs.
While the national recession got underway in December 2007, Texas managed to avoid the recession longer than much of the country. But the state's economy "deteriorated rapidly" at the end of last year -- a victim of the down economy. The state was in recession as this year started, Fed economists Keith Phillips and Jesus Canas wrote in the Fed's quarterly publication on the region's economy.
Austin and Dallas could feel some of the worst pain as the economy continues to decline this year, the report said. They have more exposure than other large Texas cities to cyclical industries, such as construction and financial services, the Austin American-Statesman reported.
The report said 296,000 jobs could be lost statewide this year, driving up the unemployment rate, which was 6.4 percent in January, according to the Texas Workforce Commission.
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Falling energy prices should continue to plague one of the state's powerhouse industries, the report said. Housing prices are expected to dip, and the number of troubled bank loans probably will increase.
"So far the state's economic losses have been moderate compared with the rest of the country's, which means Texas is still faring better than the nation as a whole," according to the report.
Recent economic reports have underscored the Texas slowdown: State sales tax collections for the first half of the fiscal year were down 2.8 percent from a year earlier, and Comptroller Susan Combs said last week that further drops are likely. As unemployment grows, the trust fund that provides benefits to laid-off workers is falling below mandated levels, which could mean higher tax rates for businesses next year.
In January, almost 120,000 Texans applied for unemployment benefits, 85 percent more than in January 2008. In the past week, 11 companies notified the Texas Workforce Commission that they plan to cut 1,200 jobs in the next few months.