301.519.9237 exdirector@nesaus.org

2.14.24 – Axios

Illustration: Lindsey Bailey/Axios

Why it matters: Economists had projected a soft landing for Texas in 2023, predicting it would avoid a major economic downturn even if the national economy took a hit.

The big picture: The Texas labor force grew at its fastest pace in decades last year and outpaced growth nationwide, Dallas Fed senior economist Pia Orrenius said at a recent economic outlook event.

  • The state’s job growth is expected to cool this year to pre-pandemic figures. “We’re cleared for landing,” Orrenius said.

State of play: Texas had the country’s fifth highest job growth by percentage last year. Nevada was first.

  • Employment was up 3.1% in Texas, compared to 2% nationwide.
  • The state’s information sector, where many tech companies had layoffs, was the only sector that recorded job losses last year.

Zoom in: Brownsville-Harlingen area earned the top spot in job growth, with 5% growth.

  • The Dallas-Fort Worth area recorded 3% growth.
  • Job growth in top-performing Austin slowed to 2.9% in 2023 because of turmoil in the tech industry.

Of note: Construction in Texas remained robust in 2023, but overall sales of single-family homes declined amid high interest rates.

  • And, builders are making smaller homes than before to reduce their construction costs and make sales, Orrenius said.

Threat level: Texas firms surveyed by the Dallas Fed in December listed geopolitical worries and uncertainty around the upcoming U.S. elections as their primary concerns over the next six months.

  • They were also less concerned about a potential recession than in 2022.

What’s next: The Fed projects job growth in the state will cool to around 2% this year.

Reality check: These are just projections. Recession concerns could return, the costs of goods could continue increasing, and consumers could end up spending less than expected this year.