Texas Job Growth Hits a Pause in 2025

Texas, known for its robust job market, is experiencing a notable slowdown. In 2025, the state's job growth is expected to be nearly flat, according to the Federal Reserve Bank of Dallas. This marks a significant departure from Texas' usual strong job growth trends.

Forecast and Predictions

The Dallas Fed's forecast utilizes several models to predict job growth, considering factors such as national economic growth, oil prices, and other economic indicators. The forecast suggests that Texas' job growth rate will be around zero in 2025. This is a stark contrast to the state's historical job growth rate of approximately 2% annually.

Texas Workforce Commission's Perspective

The Texas Workforce Commission presents a slightly different view, reporting a 1% year-over-year job growth rate as of November 2025. However, this data does not account for revisions from the first half of the year, indicating potential changes in the future.

Positive Indicators

Despite the slowdown, the forecast is not entirely negative. The statewide unemployment rate is expected to remain at 4.2%, consistent with the end of 2024. Major metro areas like Dallas-Fort Worth also saw no increase in unemployment rates. Additionally, Texas' economic productivity, as measured by GDP, experienced a small boost, likely due to increased technological integration, such as artificial intelligence.

Historical Context and Current Trends

The halt in job growth represents a significant shift for Texas, which has been adding jobs consistently while experiencing a population boom. From the end of 2021 to the end of 2024, Texas added over one million jobs, bringing the total to over 14 million. The Fed's forecast suggests that Texas has now reached 14.2 million jobs, with a net loss of 2,200 jobs in 2024.

Factors Contributing to the Slowdown

Much of the slowdown can be attributed to the oil and gas industry, which has been shedding workers due to low oil prices and other uncertainties. Major energy companies like Chevron, Exxon Mobil, and ConocoPhillips have announced job cuts in the thousands. Additionally, the Trump administration's immigration crackdown is affecting Texas' labor supply. Lingering uncertainty around tariffs and other macroeconomic factors are also weighing on Texas employers.

Bright Spots in the Economy

On a positive note, Texas has seen job growth in the healthcare sector and construction industry, partly due to the state's ongoing data center boom. In recent years, Texas has outpaced the national economy, with North Texas emerging as one of the country's most booming metro areas. However, the forecast's implications for the near future remain unclear.

Future Outlook

The absence of a spike in unemployment claims is reassuring. An energy sector recovery or other factors could push Texas back toward its traditional 2% growth rate. The Texas economy continues to benefit from low regulation, a pro-business environment, no state income tax, and low taxes. However, there are also headwinds to consider.