Watch the Broader U.S. Economy

Central Texas is living in an economic bubble where jobs are plentiful and business is booming, and it is expected by economists and political figures to continue into the fore-see able future. NOT!

The Texas general business activity index, out Monday from the Dallas Federal Reserve for January, was -34.6, a six-year low and much worse than economists had expected. An index reading below zero indicates contraction. The major drag on the Texas economy is the collapse of the price of oil and its impact on the oil industry and supporting companies.

The production index, which gauges manufacturing in the state, fell about 23 points, to -10.2 from 12.7.

The employment index also fell into negative territory, as a greater share of firms said they laid off more people than they hired.

The Dallas Fed has revised their employment growth estimates for a gain of 1.1%, or 132,000 new jobs.

In a previous study, Dallas Fed researchers have found that most new jobs are created in the lowest pay category, with far fewer in the next two higher pay categories. Thus, the bulk of the jobs created are not high paying. 

The Dallas News has reported that the Texas economy is protected by the I-35 firewall. The three major cities along I-35 are Dallas, Austin and San Antonio and they are not very dependent on the oil industry and it's jobs for economic health.

The idea that the service sector jobs, which are the primary jobs along the I-35 firewall, are immune to the downturn in manufacturing seems unconnected from reality. It is the goods producing elements of the economy that produce growth. If the GDP does not grow, then the service industry will inevitably decline. 

When signs abound that the Texas economy is slowing, Georgetown's city government should be reducing its spending, instead of increasing it 23% year over year.