Early slowdown signs emerge for U.S. oil states after crude slide
By Tim Reid
(Reuters) - After leading the U.S. economic recovery out of recession, some of the nation's top oil states are showing early signs of a slowdown as a result of the plunge in crude prices.
In Houston, Texas, the first oil industry layoffs have been announced, with realtors there predicting a sharp decline, up to 12 percent, in home sales next year.
Alaska's 2015 fiscal year budget revenue forecast will have to be lowered by almost $2 billion, according to Fitch Ratings, because of the sharp drop in the state's forecast crude prices. That will widen Alaska's budget gap to almost $3.4 billion, Fitch said in a Dec. 11 report.
States such as Texas, North Dakota, Alaska, Oklahoma and New Mexico are all likely to feel strains next year, Wells Fargo Securities municipal analyst Roy Eappen said in a recent report.
Meanwhile, household sentiment in Texas, Louisiana, Oklahoma and Arkansas where memories of the catastrophic 1980s oil crash are still fresh, weakened in October more than any other region, according to a report by Decision Analyst Inc. The Texas-based research company surveys monthly thousands of homeowners in the Census Bureau's nine regional divisions.
The West South Central division, comprising those four states, had seen the strongest growth for four years, but in October survey lagged the rest of the nation, with economic gauges improving in six regions and two recording no change.
"The fact that the economic index is in decline in this region signals that the economy in these oil states is heading for an economic slowdown," said Jerry Thomas, president of Decision Analyst.
Responding to a more than 40 percent drop in crude prices since June, at least a dozen U.S. energy companies have cut spending plans for next year - bad news for states that rely on jobs, wealth and tax income they provide. Continued...