The Dallas Fort Worth employment engine could be cooling off after consecutive years of impressive growth. The latest numbers from the Texas Workforce Commission were still solid for July, reflective of the typical summer turnover, but there are headwinds now blowing against DFW job sector growth. Dallas Fed economists have miraculously figured out that previous employment growth projections for Texas were probably overstated. They have since dialed back their job growth forecast to 2.7%, down from the previous forecast of 3.0% released just last month.

While it may catch many local economists off guard, the signs of potential softness and an inevitable end to the spectacular growth here in the DFW area were always there hiding in plain sight.  You don’t get the kind of growth we’ve seen in the DFW area without some artificial stimulus, and that stimulus was provided by the Federal Reserve’s massive balance sheet expansion, part of the overall scheme to re-inflate asset markets and cover up the remnants of the Great Recession. As we’ve seen so far it’s been mission accomplished for the Fed, but there are chickens coming home to roost in the form of debt, deflation and mean reversion as the Fed continues their balance sheet unwind. A massive tax cut for Wall Street passed late last year, is likely to add to deflationary conditions for the broader economy since it did little to nothing for average working Americans.

After the solid pace of job growth in the first half of the year, that cooling trend is noticeable in the DFW housing sector. A recent report on seller price reductions for DFW homes showed a noticeable uptick in the percentage of Dallas area home sellers chopping their list prices. That could be a growing trend as we approach the end of the year, particularly with Dallas area home prices near record highs. Home sales in the Denton County area are already butting up against a wall of affordability. Local sellers may need some help from the Treasury market in the form of lower interest rates if they want to hold out for those record high prices.