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Comerica Bank: Falling Oil Prices Herald Slower Texas Growth In 2016

The bank’s monthly index of the state’s economy has dropped to its lowest level since late 2011.

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Comerica Bank's Texas Economic Activity Index

Comerica Bank's Texas Economic Activity Index fell to 94.8 in October, down 0.7 percentage points from September. The decline brought the index to its lowest level in nearly four years.

Falling crude oil prices led to reduced drilling activity, smaller payrolls, and rising unemployment claims.

"The V-shaped recovery in oil prices and in the oil industry in general that we saw in 2008-2009 is not going to happen this time," says Robert Dye, Comerica's chief economist.

Crude oil averaged $46.22 per barrel in October. It's dropped about $10 a barrel since then.

Oil exploration and production accounts for about 10 percent of the state's economy.

"What happens to the other 90 percent of the state economy? Fortunately, that's not withering up and blowing away," Dye says. "Texas does have a diverse economy. And other parts of the energy sector, the downstream part [is] doing very well. I mean, Houston [is] continuing to add infrastructure and capacity in terms of refineries, petrochemicals, and things like that. So that's been a nice balance to this."

Dye says the state should benefit from stronger growth across the rest of the U.S. But he warns that, overall, Texas economic activity is likely to be significantly slower in 2016 than it has been over the past few years.