Texas Employment Forecast

The Texas Employment Forecast indicates jobs will increase 1.1 percent in 2026, with an 80 percent confidence band of -0.5 to 2.7 percent. The forecast is based on an average of four models that includes projected U.S. gross domestic product, oil futures prices and the Texas and U.S. leading indexes. The forecast implies 154,600 jobs will be added in the state this year, and employment in December 2026 will be 14.4 million (Chart 1).

Texas employment grew 0.1 percent in 2025 after rising 1.6 percent in 2024. The state added only 10,700 jobs last year.

“Texas employment was essentially flat in 2025. Higher productivity suppressed labor demand, and slower immigration constrained supply. In addition, employers were more cautious about hiring as a result of high policy uncertainty. Job losses were observed across several sectors, including energy, manufacturing, government, information and professional and business services. Meanwhile, there were job gains in construction, education and health services, financial activities, and trade and transportation services,” said Luis Torres, Dallas Fed senior business economist. “Among major Texas metros, Austin posted the fastest growth at 0.9 percent while San Antonio experienced the steepest decline at 0.6 percent,” he added.

The Texas Leading Index dipped over the three months through December (Chart 2). The index was dragged down by declines in the real oil price, well permits, the U.S. leading index and the Texas stock index. Declines in the Texas value of the dollar and unemployment claims, and increases in the Texas help-wanted index and average weekly hours, contributed positively to the index.

Next release: TBD

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/.