Lubbock’s and Abilene’s economies weathering drop in oil prices better than Midland and Odessa
A city’s economic index is a measurement of economic health that takes a variety of economic factors into account. Lubbock National Bank, Development Corporation of Abilene, Midland Development Corporation, and Odessa Development Corporation all publish economic indices for their respective cities.
When oil prices dropped dramatically in 2014, economists wondered how the oil bust would affect the Texas economy. Overall, the Texas economy is much more diverse than in previous decades, leading economists to predict that the state’s economy would not be devastated by the plunge in oil prices. But how would cities in west Texas be affected?
Both Midland and Odessa are currently experiencing economic downturns, as evidenced by the economic index of each city.
The Midland Economic Index peaked in December 2014 at 236.8 but has fallen to 195.3 as of September 2016.
Similarly, the Odessa Economic Index reached 231.9 in January 2015 but contracted to 194.1 as of September 2016.
“Every single component of the Odessa Economic Index is in negative year-over-year territory for the month of September, the third quarter, and the first nine months of the year,” the most recent economic report from Odessa states.
However, Lubbock has not experienced a measurable economic downturn; the Lubbock Economic Index remains at record high levels.
“The Lubbock economy has now enjoyed five years of growth through August, as the pattern of expansion in the Lubbock economy has been in place for 60 months dating back to the postrecession index trough of 118.4 in August 2011,” Lubbock National Bank reports. “Over that five-year period of time the Lubbock Economic Index has expanded by about 24%, meaning index growth has averaged a stout 4.8% per year.”
Similarly, the Abilene Economic Index is performing modestly, according to the most recent data.
“The Abilene Economic Index achieved its all-time pinnacle of 124.2 in April 2016, so aggregate economic activity remains relatively high in Abilene,” the most recent Abilene economic report says. “However, year-over-year growth rates in the index have been at or below 1% all year long, averaging only .5% over the first six months of the year.”
The bottom line: Based on these graphs, which depict the cities’ economic indices, Lubbock and Abilene appear to be weathering the plunge in oil prices just fine, while Midland and Odessa remain more susceptible to fluctuations in the oil market.
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Contact: Garrett Haley, (806) 784-3219
Coldwell Banker Commercial Capital Advisors