Texas Economic Indicators

The Texas economy expanded in March. Employment and earnings both rose. The April Texas Business Outlook Surveys showed a notable decline in company outlooks. The Texas consumer price index (CPI) ticked up in February, and Texas GDP growth was solid in the fourth quarter.

Labor market

First-quarter Texas employment growth on par with trend

Texas employment grew an annualized 1.4 percent in March (16,600 jobs) after expanding an upwardly revised 2.4 percent in February. In the first quarter, employment rose 1.9 percent, faster than the previous quarter’s 1.3 percent growth. Significant job gains were seen in oil and gas and construction, with increases of 10.3 percent and 5.3 percent, respectively (Chart 1). The Dallas Fed’s Texas Employment Forecast is for 1.5 percent growth in 2025 (December/December).

Wages rise in major metros

In March, private hourly earnings were up year over year in Texas and its major metro areas (Chart 2). San Antonio posted the largest increase, up 9.0 percent year over year. Average hourly earnings rose 7.4 percent in El Paso, 7.2 percent in Dallas, 4.5 percent in Fort Worth, 4.3 percent in Houston and 2.5 percent in Austin. Texas private wages climbed 5.7 percent.

Gross domestic product

Texas output grew solidly in fourth quarter 2024, the latest data available. The Dallas Fed’s Texas mining-adjusted real GDP increased 3.2 percent in the fourth quarter, outpacing the nation’s 2.4 percent rise (Chart 3). On average, over the past 10 years, Texas output has grown a percentage point faster than the nation. Relative to the same period last year, Texas GDP grew 2.9 percent (Q4/Q4), and U.S. GDP expanded 2.5 percent. Postpandemic, the state has posted strong output growth, expanding at a 5.0 percent pace on average compared with 3.8 percent over the 10 years prior to the pandemic.

Texas Business Outlook Surveys

TBOS showed a sharp decline in sentiment in April (Chart 4). The manufacturing survey’s company outlook index plummeted further to -28.3, down from -10.7 in March. Likewise, the service sector company outlook index declined to -15.5 in April from -12.5 in March. Participants’ comments suggest that a decline in business sentiment is attributable to domestic policy uncertainty, particularly tariffs, immigration and changes in government spending.

Consumer price index

In February, the 12-month change in Texas headline CPI ticked up to 1.9 percent (Chart 5). Meanwhile, core CPI, which excludes food and energy, also ticked up to 2.1 percent. Additionally, food and housing rose to 2.2 percent and 2.8 percent, respectively.