Weak Housing but Strong Job Growth
Over the past year, the volume of residential construction in the Dallas-Fort Worth metroplex has fallen by a breathtaking -28% versus -24% for the country as a whole. However, despite this significant pullback in housebuilding, employment in the economic region increased by +2.2% year over year in October 2007, the fourth strongest rate of job growth among the 25 largest metro areas in the country. With the exception of manufacturing, all major industrial sectors have added jobs over the past year, led by: leisure and hospitality (+4.1%); education and professional services (+3.7%); construction (+3.5%); professional and business services (+3.4%); and finance (+3.1%).

The fact that the Dallas business cycle index picked up slightly in October and the Fort Worth index exhibited moderate growth suggests that the metroplex still has considerable momentum heading into 2008. However, slowing manufacturing activity and a gradual slide in construction is likely to exert an increasing drag on growth over the next several months.

Population Growth is Twice the National Rate
Despite the current weakness in residential building, the prospects of housing demand are likely to strengthen later in the year, driven by sustained strong population growth. Population growth in the region has averaged slightly over 2% annually over the past five years, twice the national rate of increase. In addition, the recent decision to develop several new downtown parks in the central business district should serve as a catalyst to increased residential, retail and small commercial development in the city core.

Several Head Office Announcements
Also, the outlook for commercial building should be supported by recently announced headquarters expansions by Blue Cross Blue Shield of Texas in Richardson and by Fidelity in Lewisville. In addition, Comerica Incorporated’s recent announcement to relocate its headquarters from Detroit to Dallas will strengthen the metroplex’s already strong financial services base and will contribute to more support services employment.

In summary, clouds may be forming over the economic horizon of the nation as a whole, but the solid economic foundation and strategic location of Dallas-Fort Worth in energy-rich Texas should help it weather an economic slowdown extremely well.

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