The Dallas-Fort Worth-Arlington (DFW) region posted another month of solid employment gains in May, tacking on an additional 20,200 jobs compared to April according to non-adjusted numbers from the Texas Workforce Commission. For the 12-month period in May, the DFW area has added 122,000 jobs. This kept the official unemployment rate for the Dallas-Fort Worth area at 3.4 percent. Texas added 34,700 seasonally adjusted nonfarm jobs during the month.

While job growth remains solid in the DFW area, what’s also running hot are DFW prices. The consumer price index for the Dallas MSA posted at 3.9 percent, well above the state average of 2.8 percent. Anybody who has been shopping for a home in the Dallas-Fort Worth area can probably relate. That rise in inflation throughout the DFW area is a particular concern given the stagnant wage growth of non-supervisory workers. Even with a moderate U.S. inflation rate of 2.9 percent the real average hourly earnings for those workers declined in May.

The Dallas area economy continues to fire on all cylinders, and it would seem there is nothing that will stand in the way of continued employment growth. A wider view of the current market cycle suggests that is probably not the case. With this week’s interest rate hike, the Federal Reserve continued to push the yield curve lower. The real underlying economy suggests that things are not as fabulous as many government and industry pundits would have you believe.

The fact that the 10-yield treasury refuses to hold above 3% and push higher is a direct reflection of the real economic conditions and the amount of leverage (aka debt) propping up the current economy. There are a lot of things that have been inflated during the last few years, including DFW home sales volumes. Rising interest rates could very well be the thing that ends up stopping DFW employment growth in its tracks. As you can see from this longer-term view, we are marching closer and closer to that juncture where the Fed’s credibility drops to zero…


With real inflation (not the bogus official measure of inflation as captured by the CPI) running hot, it’s no wonder Americans are finding it difficult to get ahead. Wage growth simply isn’t keeping up.