Texas And The Oil Slump: How Bad Can It Get?

After a 70% decline in oil prices, will an economic slump in Texas drag the rest of the US into a recession? That’s the question posed by Goldman Sachs in a research note issued to clients at the end of last week.

The research note, titled ‘How Bad Can Texas Get?’ takes a look at the current oil slump compared to the oil bust of the 1980s, which crippled the southern state’s economy. The oil bust of the 1980s saw the price of WTI fall from $31/bbl to $10/bbl between 1984 and 1986. With the oil industry crippled, the unemployment rate in Texas rose sharply to 9.2% in 1986, an all-time high for the state, real house prices fell 30%, and the...