Job growth will continue to trend lower in Texas, with the Dallas Federal Reserve forecasting a 1.6% gain this year, down from 1.7% in 2024 and 2.4% in 2023.
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"In Texas, resilient growth is expected to continue in 2025 at about the same pace as 2024," Dallas Fed Vice President Labor Economist Pia Orrenius said, adding risks to the outlook include, tariffs, sharply lower immigration, and a rollback in federal government spending.
In addition to a crackdown on immigration, the Trump administration is threatening 25% tariffs on goods from Mexico and Canada, which are Texas' top trading partners.
Orrenius said deregulation, tax cuts, and a "robust business climate" in Texas could help counter the risks, along with the state's hefty budget surplus and rainy-day fund.
Texas Comptroller Glenn Hegar in January
Hegar's forecast expects the rainy-day fund to reach its constitutional cap in fiscal 2026.
In 2024, job growth in the triple-A-rated state was generally broadbased across sectors, with strong gains in oil and gas, financial services and construction, according to the Dallas Fed. As for job growth in major Texas metropolitan areas, Houston and Fort Worth gained the most at 1.4%, while Beaumont-Port Arthur's 4.9% job growth topped smaller metro areas of the state.
Orrenius said the unemployment rate is at "a very good level" for the state and the nation.
The Texas statewide unemployment rate was unchanged at 4.2% in December.
In his Feb. 2 State of the State address, Gov. Greg Abbott touted the strength of the Texas economy.
"Business is booming so much that we now have our own stock exchange, the Texas Stock Exchange," he said. "It will make Texas the financial capital of America."
