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Dallas Fed Chief Delivers Maiden Policy Speech At University Of Houston

Rob Kaplan focused much of his talk on the outlook for the Texas economy in an extended period of low oil prices.

Photo of Rob Kaplan, Dallas Fed president
Rob Kaplan, president of the Federal Reserve Bank of Dallas

Rob Kaplan, president of the Federal Reserve Bank of Dallas, came to the University of Houston Wednesday to deliver his first major address since taking up his post in August. He focused much of his talk on economic conditions in the Fed's 11th District, with Texas at its heart.

Kaplan began by addressing the effect of low oil prices on Texas. He noted that world production of oil currently exceeds daily demand by 1.6 million barrels, and the state will have to go through some real pain before crude prices start rising again.

"There's no doubt that supply is going to need to be further reduced among high-cost producers," Kaplan said. "Most of this reduction is already occurring in the United States, but particularly from companies that produce oil from shale."

The energy sector currently accounts for 14 percent of Texas' gross domestic product, but only about 3 percent of its employment. Kaplan said that helps to explain why the state's unemployment rate has held steady at about 4.2 percent for much of the year.

"With that rate of unemployment, we actually see labor shortages in Texas in construction, machinery and food manufacturing, nursing, truck driving, retail, and restaurants," the Dallas Fed chief said.

Asked how likely he thought it was the Fed would raise interest rates in December, Kaplan said only he expected the central bank would remain "accommodative" on monetary policy for an extended period, and that the process of any rate increases would be gradual.

 

Here’s Rob Kaplan speech:

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas Legislature and county and city governments across Greater Houston. Before taking up his current post, Andrew spent five years as Houston Public Media’s business reporter, covering the oil...

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