Bureau of Business and Government Research
Long Term Trends
Drivers of the Wichita Falls Economy
Short Term Outlooks
Risks of Short Term Outlook
Federal fiscal uncertainty could hamper expansion at Sheppard Air Force Base (SAFB) over the next several quarters. One in five workers is employed at the base, so a hiring slowdown would noticeably impact job growth in the metro area.
However, a hiring slowdown would be preferable to mass layoffs, which would likely push Wichita Falls into recession. On a positive note, Base Realignment and Closure is not expected in 2013.
SAFB houses the Euro-NATO joint jet pilot training program, which should partially insulate the base from budget cuts. However, a drawdown in funding could reduce the number of U.S. military personnel which, in turn, could ultimately lead to reduced enrollment in the pilot training program.
More tragically, if automatic defense spending cuts outlined in the federal Budget Control Act go into effect, then the U.S. Air Force would likely have to cut funding at Sheppard.
Amid dwindling state aid and falling enrollment, Midwestern State University is slowing hiring plans. To hedge against this possibility, the University has initiated voluntary separation agreements by offering buyouts for certain workers to take early retirement.
Tuition and fees account for an ever larger share of operating capital than they did before the recession. And, because of the recession and weak recovery, tightened state budgets have slowed the growth of state aid to higher education has . Also, enrollment has declined because of increased competition from other area colleges.
Mining’s share of employment is triple that of the U.S. and could be a source for future growth should oil and gas prices rise significantly. At present, falling natural gas prices appear to be slowing activity in the Barnett Shale.
Abnormally hot summer weather in the U.S. helped absorb some of excess supply of natural gas as many electricity providers use natural gas to power their grids.
If recent weather trends continue and natural gas prices rise steadily over the next several years, it should support above-average industry growth.
Summary & Conclusions
Wichita Falls’ recovery will face challenges as the year winds down. Hiring is not likely to pick up its pace as businesses face weak demand. Sheppard has provided a cushion for Wichita Falls in times of national recession, but it will become a significant drag on the economy if potential defense cuts become a reality.
Longer term, the metro area is projected to have improved economic performance, but weak population expansion and relatively few growth drivers provide considerable downside risk to the outlook.