Texas Employment Forecast

The Texas Employment Forecast implies that employment growth was around zero in 2025, with an 80 percent confidence band of -0.3 to 0.3 percent. The forecast is based on an average of four models that include projected U.S. gross domestic product, oil futures prices and the Texas and U.S. leading indexes. The forecast implies Texas lost 2,200 jobs last year and employment in December 2025 was 14.2 million (Chart 1). Growth in December is expected to have been an annualized 0.5 percent.

Texas employment dipped an annualized 0.4 percent in November for a loss of 4,600 jobs. Additionally, employment in October fell 0.5 percent (-5,600 jobs). The state lost around 23,000 jobs during the three months ending in November 2025. In addition, the second quarter benchmark revision lowered June-over-March employment growth by 2.6 percentage points.

“Employment growth weakened during fourth quarter 2025. Taken together with the negative benchmark revisions in the first half, 2025 Texas job growth through November is slightly negative at -0.1 percent—well below its long-term average of 2.0 percent. Higher productivity is suppressing labor demand, and less immigration is constraining labor supply,” said Luis Torres, Dallas Fed senior business economist.

“Professional and business services and oil and gas employment experienced the largest declines in November. In addition, the loss of federal government jobs has contributed to job declines in October and November. Meanwhile, Austin registered solid job growth in November, while the other major Texas metro areas saw flat to negative growth,” he added.

The Texas Leading Index fell slightly over the three months through November (Chart 2). The majority of the components decreased; increases in new unemployment claims and the Texas value of the dollar and decreases in the real oil price, the U.S. leading index and well permits pushed the index down. Increases in the Texas stock index, the help-wanted index and average weekly hours were positive contributors.

Next release: February 6

Methodology

The Dallas Fed’s Texas Employment Forecast projects job growth for the calendar year and is estimated as the 12-month change in payroll employment from December to December.

The forecast is based on the average of four models. Three models are vector autoregressions for which Texas payroll employment is regressed on the lags of West Texas Intermediate (WTI) oil prices, the U.S. leading index and the Texas Leading Index. The fourth model is an autoregressive distributed lag model with regression of payroll employment on lags of payroll employment, current and lagged values of U.S. GDP growth and WTI oil prices, and Texas COVID-19 hospitalizations through March 2023. Forecasts of Texas payroll employment from this model also use forecasts of U.S. GDP growth from Blue Chip Economic Indicators and WTI oil price futures as inputs. All models include four COVID-19 dummy variables (March–June 2020).

For additional details, see dallasfed.org/research/forecast/.