Texas job growth forecast to slow in 2025
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Lindsey Bailey/Axios
Texas' job growth slowed more than expected in 2024 and is expected to continue to grow at a slow pace in 2025, per an analysis by the Federal Reserve Bank of Dallas.
Why it matters: Though the Texas economy is still strong, tariffs, stricter immigration policies and lower federal government spending could threaten the state's outlook for 2025, Dallas Fed senior economist Pia Orrenius said at an event on Friday.
Zoom in: Fort Worth and Houston had the highest job growth last year among Texas' largest metros.
Context: Fort Worth and Houston tend to have more blue-collar, production-based jobs, while Dallas and Austin's economics lean more on white-collar, professional services.
- The Fed projected that Texas' job growth would increase about 2% in 2024. It grew around 1.7%, per the new analysis.
State of play: Energy, financial services and construction experienced the biggest growth last year among all the state's sectors.
- The high-tech sector stabilized in 2024 after going through layoffs in 2023.
The intrigue: Job growth was 1.4% in Fort Worth and Houston, probably because 2024 was a big year for the energy and construction industries. Housing in those two cities is also cheaper than in Austin and Dallas, Orrenius said.
- Smaller metros, such as Beaumont, Brownsville and College Station, experienced more employment growth in 2024 than the average in those cities during the previous decade.
- "My hypothesis is that this massive growth in the labor force has allowed the disbursement of the labor force to some of these smaller metros, and allowed them to grow," Orrenius said.
Yes, but: Dallas' job growth last year was only 1.1% and Austin's was 0.5% — the lowest in three years for both cities.
- The high-paying professional and business services industry — which is big in Dallas — struggled last year, growing only 1.1%.
What they're watching: Business leaders surveyed in Texas are optimistic that the new administration will allow deregulation and enact tax cuts.
- But economists are worried about the impact of anticipated tariffs and stricter immigration policies on the state's economy.
- Texas stands to lose $47.1 billion — the most of any state — if President Trump's tariffs on goods from Canada and Mexico take effect, along with those already imposed on China.
- "Mexico has been our No. 1 trading partner since forever. … We're really in the line of fire here on tariffs," Orrenius said.