Unemployment spikes in Valley, nears double digits

McALLEN - Hidalgo County's unemployment spiked nearly a full point in December, rising to 9.1 percent in a further sign the nation's horrid economy is levelling the Rio Grande Valley, according to figures released Friday by the Texas Workforce Commission.

Unemployment claims rose by 2,600 in December - the highest jobless figure in the state - a day after economists from one of the region's biggest banks warned that economic growth across Texas will continue slowing through 2009.

"Our state's economy has been fairly resilient during these months of economic uncertainty, but the national economic storm has reached Texas," commission chairman, Tom Pauken said. "The challenge we face now is to minimize the impact of the national trends by continuing to promote our strong business climate and address the skills needs of Texas employers."

Officials from Compass bank forecasted Thursday that the state's economy will grow by 1.2 percent in 2009, a significant slow down from the 2 percent growth in 2008, but still the best growth rate in the country.

Locally, while the number of unemployment claims continued rising after a half percentage point jump in November, the McAllen area actually added close to 500 jobs in November. The retail and wholesale trade sectors led job growth in December, at a time when struggling retailers still added seasonal jobs to contend with the Christmas shopping rush.

The unemployment figure is a dramatic increase from a year ago when the rate was 6.8 percent, and signals that the area is closing on double digit unemployment of decades past.

Outlying cities are leading the rise in unemployment as both the cities of McAllen and Edinburg had jobless figures below 5 percent. Mission had a rate of 6.3 percent.

For the first time since 2004, the state-wide unemployment rate hit 6 percent, as Texas shed jobs across a broad swatch of industries. The Trade, Transportation and Utility sector shed 8,100 jobs while Manufacturing lost close to 8,000, according to the commission.

The state actually shed 37,900 jobs in December, the first month the Lone Star posted job losses this year. Still, for the year, Texas has actually had positive job growth.

In Cameron County, unemployment claims rose to 8.2 percent, after hitting 7.8 percent in November, according to the commission.

On Tuesday, top economist from Compass Bank, a subsidiary of Spanish-banking giant Banco Bilbao Vizcaya Argentaria, issued the bank's 2009, U.S. Regional Watch - an economic report with a focus on Texas, New Mexico, Arizona, Florida and Alabama.

Nathaniel Karp, chief economist for Compass, said predicated that the state will continue to be impacted by falling oil prices through 2009, but that the impact will not be as drastic as previous recessions.

"A 10 percent decline in oil prices subtracts about .1 percent (Gross Domestic Product)," he said. "The net effect, according to our estimate, is about a two percent lower GDP growth for 2009."

The rather rosy picture for the Lone Star State was small bit of positive news in a forecast that Compass recently revised downward to account for continuing problems with real estate, the credit markets and the contraction in consumer spending.

Home sales fell 15 through the first three quarters of 2008 while residential building activity fell by an average of 25 percent across the state during the same time period, according to the report.

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Sean Gaffney covers business, the economy and general assignments for The Monitor. He can be reached at (956) 683-4434.