The job growth trajectory in Texas is showing signs of decline, with the latest forecast by the Dallas Federal Reserve indicating a modest increase of 1.6% in employment for 2025. This represents a slight decrease from the 1.7% growth anticipated for 2024 and a significant drop from the more robust 2.4% seen in 2023. The state is projected to add approximately 225,000 jobs in 2025, a decrease from last year’s total of 244,000. This shift suggests a cooling economy, raising questions about the contributing factors and the possible implications for various sectors within Texas.
The anticipated employment growth comes amidst a landscape fraught with potential economic risks. Dallas Fed Vice President Pia Orrenius highlights several concerns, including the impact of tariffs, declining immigration rates, and a potential reduction in federal government spending. These elements could hinder job creation and stifle economic growth in a state that has long prided itself on its vibrant and diverse economy. Notably, the threat of hefty tariffs on imports from Texas’s leading trade partners, Mexico and Canada, poses an immediate challenge to the state’s economy, particularly in trade-sensitive sectors.
However, there are also positive factors that may bolster Texas’s economic resilience. Deregulation policies and tax reductions, coupled with a strong business climate, create a favorable environment for growth. The state’s substantial budget surplus and rainy-day fund—projected by Texas Comptroller Glenn Hegar to be $23.8 billion for the fiscal 2026-27 biennium—add a layer of financial stability that could support continued economic activity.
Despite the challenges, job growth across Texas has remained relatively broad-based in recent years. In 2024, significant gains were noted in key sectors such as oil and gas, financial services, and construction. Metropolitan areas like Houston and Fort Worth recorded growth rates of 1.4%, while the Beaumont-Port Arthur area saw an impressive growth rate of 4.9%. These figures indicate that, even amid slower overall growth projections, certain regions and industries within Texas are thriving, driven by factors unique to their operating environments.
The unemployment rate currently sits at a stable 4.2%, a figure deemed “very good” by Orrenius, reflecting a relatively healthy labor market. Governor Greg Abbott has praised the strength of the Texas economy, mentioning the establishment of the Texas Stock Exchange, which aims to position the state as a financial hub by initiating trading activities in 2026. This indication of growth, alongside ongoing developments in various sectors, suggests that while challenges persist, Texas’s economic foundation remains sturdy.
Overall, the job growth forecast for Texas symbolizes a complex interplay of resilience and risk. As the state navigates these challenges, the focus will need to shift towards sustaining growth while mitigating risks to ensure a robust economic future for its residents.