Dallas Fed: Texas employment forecast weakens

DALLAS—The Texas Employment Forecast released by the Federal Reserve Bank of Dallas indicates jobs will increase 1.4 percent in 2026, with an 80 percent confidence band of 0.7 to 2.1 percent.

That would be a decrease from the previous month’s forecast.

The forecast is based on an average of four models that include projected national GDP, oil futures prices, and the Texas and U.S. leading indexes.

“Texas employment growth slowed sharply in February and year-to-date growth is now more aligned with earlier forecasts for 2026,” said Luis Torres, Dallas Fed senior business economist. “Given several headwinds, our expectations are for this year’s growth to come in at the lower end of the forecast’s confidence band, at around 1.0 percent. Declining immigration is constraining labor supply, and higher productivity is suppressing labor demand. Business activity captured by our Texas Business Outlook Surveys has recently moderated, and geopolitical uncertainty remains elevated. Meanwhile, high oil prices are expected to boost state economic activity only if they are sustained,” said Luis Torres, Dallas Fed senior business economist.

Additional key takeaways from the latest Dallas Fed report:

• The forecast suggests 205,500 jobs will be added in the state this year, and employment in December 2026 will be 14.6 million.
• Texas employment grew an annualized 0.3 percent in February, while January job growth was 1.1 percent, which was revised down.

In February, the unemployment rate, which takes into account changes in the total labor force along with other factors, decreased in Austin–Round Rock, Brownsville–Harlingen, Dallas–Plano–Irving, El Paso, Fort Worth–Arlington, and San Antonio–New Braunfels, according to seasonally adjusted numbers from the Dallas Fed.

The rate was unchanged in Houston–The Woodlands–Sugar Land.

The Texas statewide unemployment rate was unchanged at 4.3 percent in February. 

Find out more about the Texas Employment Forecast, plus additional information on seasonally adjusted and benchmarked Texas jobs data and metro unemployment rates.

For additional economic information on Texas metros, visit At the Heart of Texas.