Texas Employment Forecast

• WATCH: Texas Economic Outlook 2025—Resilient Growth

The Texas Employment Forecast indicates jobs will increase 1.6 percent in 2025, with an 80 percent confidence band of 0.8 to 2.4 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. In addition, this forecast utilizes Texas employment data that has been adjusted to include anticipated downward revisions by the Bureau of Labor Statistics. The forecast implies 225,000 jobs will be added in the state this year, and employment in December 2025 will be 14.4 million (Chart 1).

Texas employment grew 1.7 percent in 2024 after rising 2.4 percent in 2023. The state added over 244,000 jobs last year. “Job growth was generally broad-based across sectors, with strong gains seen in oil and gas, financial services and construction. Growth slowed notably in trade and transportation, leisure and hospitality, and government,” said Jesús Cañas, Dallas Fed senior business economist. “Among major Texas metros, El Paso led employment expansion with 2.1 percent growth; among small metros, Beaumont–Port Arthur took the lead with 4.9 percent job growth.”

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

Next release: March 14, 2025

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/.