The job market in Texas is facing a slowing growth trend, with projections indicating a decline in job gains over the next few years. According to the most recent Texas Employment Forecast from the Dallas Federal Reserve, job growth for 2025 is anticipated at 1.6%, a slight reduction from the previous year’s rate of 1.7% and a decrease from 2.4% in 2023. Despite these lower expectations, the forecast still predicts the addition of 225,000 jobs in 2025, albeit less than the 244,000 added in 2024. The consistency of growth is seen as a positive sign, as stated by Dallas Fed’s Vice President for Labor Economics, Pia Orrenius, who emphasized that while resilient growth is likely to continue, there are underlying risks that could impact these projections.
Identifying Risks to Employment Growth
Several factors contributing to the risks associated with Texas’s job market include potential tariffs and reduced immigration, both of which are threats that could reverberate through various sectors. The Trump administration’s proposal of imposing a 25% tariff on imports from Mexico and Canada—the state’s principal trading partners—poses a significant economic concern. This could affect not only job creation but also increase costs for consumers and businesses alike. Moreover, severe limitations on immigration may exacerbate labor shortages across multiple industries, further complicating an already challenged job landscape.
Nevertheless, there are indicators supporting the potential for continued economic resilience in Texas. Orrenius points to the state’s “robust business climate,” bolstered by favorable deregulation and tax policies, which could mitigate some risks. Additionally, Texas’s impressive financial standing, highlighted by a projected $23.8 billion cash balance going into the upcoming biennium, suggests that the state possesses substantial resources for navigating economic fluctuations. This is particularly notable against the backdrop of last year’s record surplus—which was largely attributed to federal pandemic funding and increased sales tax revenue due to inflation.
Job growth across various sectors in Texas remains diverse. In 2024, there were significant gains in vital industries such as oil and gas, financial services, and construction. Houston and Fort Worth emerged as stronger regions, experiencing a growth rate of 1.4%, while Beaumont-Port Arthur exhibited remarkable growth at 4.9%. The uniformity of growth across sectors reflects a balanced economic structure, although it remains crucial to monitor the impacts of external pressures such as tariff policies.
As of December, Texas maintained a steady unemployment rate of 4.2%, which is viewed favorably on both state and national levels. Governor Greg Abbott highlighted the resilience of the Texas economy during his State of the State address, remarking on the inception of the Texas Stock Exchange—expected to launch in 2026—which heralds a new chapter in the state’s economic narrative. While this development indicates an ambitious outlook for Texas, it remains essential for stakeholders to remain vigilant and adaptive amidst the shifting economic landscape as various external factors continue to pose challenges.