NEW YORK - As the saying goes, everything is bigger in Texas.
For the past five years, the economy of the Lone Star State has outperformed the rest of the United States.
But the collapse in oil prices has left Texas facing its toughest test since the financial crisis.
A 50% tumble in oil prices since June has prompted companies such as Royal Dutch Shell and Chevron to slash billions of dollars in worldwide investment. Oil services companies like Schlumberger and Halliburton have announced thousands of job cuts.
So far, only a handful of petroleum companies have filed layoff notices in Texas this year, and the Texas Workforce Commission actually reported an increase in mining jobs in December.
Yet few doubt what lies ahead for the second-biggest U.S. state, by economic output and population, after California.
There will be "a major-league contraction in oil and gas activity in Texas," said Karr Ingham, owner of Ingham Economic Reporting based in Amarillo in oil-rich West Texas.
"Over the coming months, the industry is going to shed jobs on a regular basis. We're very early in that process."
Boyd Nash-Stacey, senior economist at BBVA Research in Houston, predicted the downturn would cost some 60,000-80,000 mining jobs in Texas, with an additional ripple effect on other sectors such as retail and hospitality.
The oil slump already has begun to cool the real estate market in Houston, the fourth-biggest U.S. city and an economic powerhouse for most of the 2000s due in large part to the surging energy industry.
"It's a question of how bad it's going to get and for how long," said Charles Gordon, a vice chairman of real estate firm CBRE in Houston. "The shock is how fast energy prices fell."
Texas has been outpacing U.S. growth for some time. In 2013, the Texas economy grew at an annual clip of 3.7% compared with 2.2% for the whole economy, and in the prior year its pace was more than double the national rate, according to U.S. Commerce Department data.
A Repeat of 1986?
The throng of activity into older oil centers like the Permian Basin in West Texas and the newer Eagle Ford shale in southern Texas has been a driver.
Economists agree that matching that flaming growth level will be impossible in 2015, but there is debate about just how bad things will get.
JPMorgan Chase chief U.S. economist Michael Feroli suggested in a December report that the outlook for Texas was comparable to 1986, when a steep drop in oil prices was followed by deep layoffs, big declines in the real-estate market and a banking crisis.
"Texas, will, at the least, have a rough 2015 ahead, and is at risk of slipping into a regional recession," the report said. Given its huge size, "the prospect of a recession in Texas could have some broader reverberations."
But BBVA's Nash-Stacey said many parts of Texas, including big cities Dallas and San Antonio, have limited exposure to oil and should benefit from the relief of lower gasoline prices.
Moreover, since the 1980s, the state has added a major technology center in the Austin area, home to Dell, and built out the giant Texas Medical Center in Houston, which has significant research programs for cancer and other diseases.
"It's not a death blow," Nash-Stacey said. "Texas isn't what it was in the 1980s."
"Over the coming months, the industry is going to shed jobs on a regular basis. We're very early in that process." - Karr Ingham, Ingham Economic Reporting
The Federal Reserve of Dallas also expects positive economic growth in 2015 in Texas.
"The bottom line is it's going to cause growth to slow, but job growth will remain positive," said Keith Phillips, a senior economist with the central bank division in San Antonio.
Ingham, the Amarillo economist, agreed that Texas will likely lodge some growth in 2015 statewide.
But Ingham predicted about a 10% contraction in the Midland-Odessa oil region, where some 8,000 oil workers will lose jobs and all businesses are affected by the sector.
Ingham said oil companies will be cautious in the short run before hiring back staff, even if oil prices recover. That could result in departures from oil towns like Midland.
"You're looking at at least 18 months out into the future before things start to look a little bit better out there," Ingham said. "Who's in a position to ride that out in terms of not having a job and not having income?"Copyright Agence France-Presse, 2015